SPAIN. Airports company AENA has reported a 9.6% rise in commercial revenues year-on-year in 2018 to €1,162.4 million. The growth was attributed mainly to rising minimum annual guarantees (MAGs) from existing contracts and sales growth in car parking and VIP services.

Commercial growth was also supported by a 5.8% rise in passenger traffic across the Spanish airports network, where the total reached 263.8 million. But duty free income grew by just 2.9% year-on-year, well behind the international traffic growth rate of 4.1%, which was dragged back by a 3% fall in UK travellers. The figure for duty free sales was €318 million, or 27.8% of AENA’s commercial income, effectively matching its MAG agreement (see below).

How commercial performed at AENA in 2018, with F&B and speciality retail growth outstripping a soft duty free performance (click to enlarge).

The airport company noted a negative impact on revenues from a shift in the traffic mix towards low-cost passengers “with lower propensity to spend”, the uncertainty over Brexit and the devaluation of Sterling. In per-passenger terms, commercial revenue was €4.34, 3% up on the same period in 2017 (€4.21).

Key developments during the year included remodelling and reopening of duty free shops, including a walk-through, at Malaga Airport, the remodelling of the T4 ‘Atrium’ store at Madrid Barajas Airport, the new ‘Millennium’ shop at Madrid T2-T3 and the opening of the new walk-through shop at Bilbao Airport. The refurbishment of the Madrid T1 Non-Schengen shop continues. A new duty free store will open soon at Murcia Airport following an upgrade.

The breakdown of traffic by key country in 2018; note the fall in UK passengers, a vital nationality for retail spend.

Speciality retail shops generated €106.4 million in revenue in 2018, up 16.1% on the same period in 2017. Food & beverage also performed well, with revenues for the period amounting to €200.7 million, up 14.3%.

Airport advertising revenue climbed by 5.1% to €33.2 million. AENA noted that contracts for this channel (run by JCDecaux in most locations and JFT in the Canary Islands) expired last September, were retendered and are currently the subject of evaluation.

During the year, noted AENA, income derived from MAGs represented 16.5% of the revenue of businesses with relevant (MAG-based) contracts, which include duty free, compared with 11.4% in 2017.

It also set out the MAG payments due in 2019 and 2020 before the duty free contract expires, with Dufry’s MAG set at €341.3 million this year and €319 million next year. As reported previously, Dufry has been hit by sharp and consistent rises in rental payments under the terms of the concessions it won (as World Duty Free Group) in 2012.

Above: The Dufry MAG commitments through the life of the duty free contract; top: AENA MAG commitments from key channels for 2019 and 2020 (click to enlarge).

Setting out its objectives for the year ahead, AENA said it planned to take action to improve the commercial performance of duty free, as reported, and crucially, to define its strategy for the new duty free contract from 2020. As well as awarding the new advertising contract, it plans to tender further speciality and F&B concessions that expire this year.

Below, AENA Chairman and CEO Maurici Lucena Betriu outlines the highlights of the past year for the group.