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Fouzi Fathaldin: “The duty free shops will be provided for the service of international departing and transit passengers at King Abdul Aziz International Airport (Jeddah), King Khaled International Airport (Riyadh) and King Fahad International Airport (Dammam).” |
SAUDI ARABIA. The Kingdom of Saudi Arabia is considered one of the great untapped opportunities for the duty free industry. This country that hosts millions of religious tourists every year has no airport duty free business. But that is all about to change. Travel Retail Markets Middle East & Africa Publisher Soraiya Qadir spoke recently to the man entrusted with taking the concept forward in the Kingdom, Fouzi Fathaldin, Director General of Business Development and Properties Management, Ministry of Defence and Aviation, Kingdom of Saudi Arabia.
Soraiya Qadir: Following the Royal decree some years ago to set up duty free zones at or near certain airports in the Kingdom, are you now close to making a public announcement on this? If so, which city airports have been earmarked and where will you first start?
Fouzi Fathaldin: The duty free shops will be provided for the service of international departing and transit passengers at King Abdul Aziz International Airport (Jeddah), King Khaled International Airport (Riyadh) and King Fahad International Airport (Dammam).
Spaces required for the operation of these shops have been specified at the international departure lounge of each of the three airports.
When are tender bids to be invited for duty free zones and airport areas? And what are your main conditions for the bidders to qualify, in order to make a selection of the serious ones? Have international companies expressed interest in bidding?
Fouzi Fathaldin: Requests for Proposals (RFP) will be issued to qualified Saudi national companies. However applicants are required, as a main condition, to have a joint venture or other type of agreement with an international duty free company which is operating at some of the major world airports. Moreover the presidency of the Civil Aviation department will receive a percentage of gross sales based on a minimum annual guaranteed income.
How will the tender be made public?
Fouzi Fathaldin: The bid will be advertised on the local newspapers as soon as the necessary procedures are finalised.
Who is presently running the international airport shops at Jeddah, Riyadh and Dammam? Will these parties also be allowed to bid?
Fouzi Fathaldin: Commercial shops at the three international airports are leased by public auction. Most of the shops at the three international airports are presently operated by the Saudi company Al – Musbah Trading Group. The present operators, as other qualified Saudi national companies, can bid for the duty free shops.
We are informed that apart from commercialising the airport spaces at major airports, you are also contemplating setting up adjacent free zones near airports, based on the model of Jebel Ali and Dubai Airport Free Zones. Is that true?
Fouzi Fathaldin: We would like to inform you that the Royal Decree you mention was issued for the establishment of duty free shops and not duty free zones. Accordingly, the information above is concerned with the establishment and operation of duty free shops at the Kingdom’s International Airports.
You have twice attended the MEDFA conference in Dubai. Are you a MEDFA member? And what would you like to see added to the next agenda in December 2005?
Fouzi Fathaldin: Please note that we attend MEDFA at Dubai to be acquainted with the current developments in the duty free business in the region. However, we will be a member as soon as the duty free shops are established and become operational at our international airports.
[BACKGROUND: Duty free has been a long time coming in Saudi Arabia. The following article appeared in Arab News on 13 April 1999.]
KINGDOM TO OPEN DUTY FREE SHOPS
Saudi Arabia today decided to open duty free shops at international airports and promote transit services to increase revenues.
The decisions aimed at boosting the Kingdom’s economy and trade were taken by the Council of Ministers, which met under the chairmanship of Custodian of the Two Holy Mosques, King Fahd. The Cabinet also decided to revise fees and charges and facilitate procedures at international airports to attract more airlines and other users.
Spelling out the conditions for establishing duty free shops, the Cabinet said, “goods which are banned in the Kingdom would not be sold in the shops”.
“Sales in the shops will be limited to goods allowed in the Kingdom’s markets,” it added. The shops will also promote locally-made products.
The Cabinet said investors in the duty free shops should give priority to hiring Saudi citizens. The shops will be located in the departure areas beyond the immigration controls. Sales at the shops will be restricted to passengers leaving the Kingdom. The warehouses for duty free shops will be subjected to customs rules and regulations but the goods sold in the shops will be exempted from customs duties, the Cabinet said.
[Footnote: Travel Retail Markets Middle East & Africa is published by Soraiya Qadir. The full version of her interview with Fouzi Fathaldin is included in the April issue of the magazine out soon. To subcribe or for advertising or editorial enquiries please e-mail Soraiya at Trdfmea@aol.com ]
