By Saifur Rahman, Business Editor www.gulfnews.com
Dubai: Dubai Duty Free (DDF), the world’s largest travel retail operation, will part-finance the development of a new concourse and terminal, part of the Dh28 billion expansion of Dubai International Airport, the world’s fourth biggest international passenger hub, a top official said.
“I am glad to say that Dubai Duty Free and Dubai Airports will mainly finance the development of Concourse 4 at Dubai International Airport,” Colm McLoughlin, Executive Vice-Chairman of Dubai Duty Free, told Gulf News in an exclusive interview.
This would be the first major investment by Dubai Duty Free in a large infrastructure project following the construction of its Dh500 million headquarters and central storage at Al Ramool and the new five-star 293-room luxury hotel at the Aviation Club.
The Dubai Government-owned entity has set up Dubai Duty Free Leisure — as a separate division to look after its leisure projects — including the Irish Village, the Century Village and the Dubai Tennis Stadium — owned by Dubai Duty Free.
Jumeirah Group will manage the hotel once it’s completed later this year.
The complex is located near a set of aircraft simulators at the Emirates Trainning College and cabin crew training facility owned by Emirates Group.
The Dubai Government last month unveiled a Dh28.8 billion plan to expand its airport that will add a fourth concourse and a terminal at Dubai International Airport’s existing 14-square kilometre site to boost its capacity to 90 million passengers per annum by 2018.
In 2010, Dubai International handled a record 47.2 million passengers, a 15.4 per cent increase over 2009. This made it the 13th busiest airport in the world by passenger traffic and the fourth busiest airport in the world by international passenger traffic.
Dubai Duty Free, which last year reported sales revenues of $1.27 billion, operates on 18,000 square metres of space at Dubai International.
It will launch operations at Dubai World Central — Al Maktoum International Airport (DWC-AMIA) — the world’s largest Greenfield airport development being developed at a 140-square kilometre patch of land in Jebel Ali, when commercial passenger flights starts operation.
It has set up a 2,500 square metres duty free operations at DWC-AMIA, ready to start.
“Besides, we will add a further 8,000 square metres of retail space in Concourse 3 when it opens in 2013 and a further 8,000 to 9,000 square metres of space at Concourse 4, that will more than double the size of our current operations,” he said.
“At the DWC-AMIA, our operations will occupy 64,000 square metres of space across two mega terminals and five concourses, when completed.”
Dubai Duty Free, the sole operator of duty free travel retail within the emirate of Dubai, was set up by the Department of Civil Aviation (DCA) with the help of a group of Irish travel retail consultants from Shannon Airport in 1983.
Colm McLoughlin was the leading member of the Irish team.
Following the six-month contract, he was requested by DCA to run the operation.
Dubai Duty Free started on December 20, 1983 with 100 employees with first-day sales reaching $44,000. The rest is history.
About 28 years later, it registers 60,000 transactions a day and sells 71 million items of merchandise every year.
“At the end of the first year of operations, our sales revenue was $20 million, slightly higher than our record-high daily sale of $18 million on December 20, 2010,” McLoughlin says.
In 2009, the ownership of DDF was transferred to the Investment Corporation (ICD) of Dubai by a Royal Decree.
Although Dubai Duty Free does not declare profits, McLoughlin said, it remains a profitable operation.
“Yes, we are a very profitable organisation,” he said.
Generally, travel retailers command about ten per cent profit on sales revenues industry-wide.
However, in countries where direct taxes are not imposed and labour costs come cheap, operational margins could be much higher.
DDF last month reported a 16.6 per cent increase in its half-year sales at $698 million (Dh2.56 billion) between January to June this year, over the same period last year.
During the first half of this year, it sold 1.34 million bottles of perfumes, 2.08 million cartons of cigarettes, 528,842 kilogrammes of Nido milk powder, 791,306 kilogrammes of Tang, 78,055 mobile handsets, 109,741 watches, 1,463 kilogrammes of gold and 512,981 kilogrammes of nuts.
About 41 per cent of the sales at DDF are conducted by credit card.
“This year, we expect to record sales around $1.45 billion and double the current level of revenues in five years,” McLoughlin said.
“We usually double our revenues every five years. Within the next five years, the Concourse 3 will become operational — which will be the biggest terminal for Airbus A380s.”
As part of its 10-year, growth projections, sales at Dubai Duty Free are expected to hit $2.5 billion mark by 2017. It has a strong corporate social responsibility arm, supporting major events.
Doing his Duty Free
Colm McLoughlin was born in Ballinasloe, Co. Galway, Ireland in 1943. Colm began his retailing career in London in the 1960’s working for the popular high-street chain of Woolworths, before moving back to Ireland to work for Shannon Duty Free. As General Manager of Shannon Duty Free, Colm was one of a team of 10 from Aer Rianta (the Irish Airport Authority) who moved to Dubai in 1983 at the request of the Dubai Government, to set up Dubai Duty Free.
Following the successful opening of Dubai Duty Free in 1983, Colm was asked to remain as General Manager of the start-up operation. Colm later became its Managing Director. Dubai Duty Free is widely regarded for having set the benchmark for the duty free industry in the region.
In July 2011, Colm was named Executive Vice Chairman of Dubai Duty Free and its subsidiary businesses, which include The Aviation Club, The Irish Village, The Century Village and the Dubai Tennis Stadium; home to the Dubai Duty Free Tennis Championships. Colm’s remit also includes the soon-to-open Jumeirah Creekside Hotel.
Under Colm’s direction Dubai Duty Free has become a retailing giant and the recipient of some 200 industry awards. During the course of his 42 years in the duty free industry, Colm himself has been honoured with several personal awards.
Colm is married to wife Breeda, and has three adult children and one grandchild.
Travel retail sales rise
Global duty free and travel retail sales grew 13 per cent to $39 billion last year, according to Generation Research, with airports accounting for $23.30 billion (59.8 per cent market share). Duty Free operations in other shops reported $10.80 billion (27.7 per cent); airlines owning travel retail operations reported $2.62 billion; (6.7 per cent); and ferries making the rest $2.26 billion (5.8 per cent).
Duty free sales at the Dubai International Airport represent nearly half of the total duty free sales in the Middle East and North Africa that last year reached $2.4 billion.
The top four duty free and travel retail locations above $1 billion in sales in 2010 were Dubai International Airport, followed by Seoul Incheon International Airport, London Heathrow and Singapore Changi.