Lima’s pioneering new duty free agreement
Lima’s Jorge Chávez International Airport will soon have a new duty free partner in Lagardère Travel Retail after the two signed off on a pioneering profit-share agreement in Paris yesterday.
Global airport operator, Fraport, is responsible for operating and developing the Peruvian gateway through subsidiary, Lima Airport Partners (LAP).
Both LAP and Lagardère Travel Retail claim that the deal is the first large-scale implementation of a business model that has been widely discussed in the industry to better balance risks and benefits between the airport and retail operator.
They note that “the goal is to unleash growth potential, even more relevant in the context of the COVID-19 pandemic and the resulting drop in global air traffic”.
The 13-year deal comes into effect in January 2022 and will see Lagardère Travel Retail introduce the Aelia duty free brand at the airport, which currently boasts 3,000 square metres of commercial space.
The innovative profit-sharing agreement sets new standards that both partners hope to capitalise on during an environment of uncertainty in the post-Covid consolidation period.
This retail model, which has come into sharp focus during the crisis, has been discussed for several years as a necessary evolution to maximise sales potential and to introduce greater balance and new opportunities in the way risks and benefits are shared between parties.
It is believed that the profit-sharing agreement will open up significant revenue potential for both Lagardère Travel Retail and LAP, as well as greater investment opportunities – ultimately benefitting travellers and enhancing the airport experience at the popular Lima Airport hub.
Lagardère Travel Retail’s chairman and CEO, Dag Rasmussen, said: “We are thrilled to have found in LAP a like-minded partner who has demonstrated the most innovative and pioneering way of thinking, from selecting an operator via an innovative Partnership Selection Process up to the contract terms.
“As we continue to face a great deal of uncertainty and are relatively new to the South American region, this profit-sharing agreement is a great vote of confidence from LAP.
“I am personally grateful for their trust and support in turning theory into action and opening up new perspectives for business models in our industry. We are also confident this is a stepping stone for our partnership with Lima Airport and its majority shareholder Fraport, so that we can all maximise our global expertise and reach to replicate this success elsewhere.”
While Juan Jose Salmon, CEO of LAP, noted: “In the middle of the pandemic, Lima Airport Partners has successfully negotiated a pioneering partnership that brings a renowned and long-term partner to Lima Airport.
“Our co-operation with Lagardère Travel Retail fits fully into our vision-of-the-future for airport retail. We believe that collaboration is the key to managing business relationships, as well as actively engaging in new partnership models.
“We are impressed by Lagardère Travel Retail’s high degree of engagement and innovation, which they will soon be bringing to the Peruvian airport retail market.
“In the context of LAP’s airport expansion programme, this agreement also sends a strong signal to Peru and the global aviation and travel industries. Our agreement will take us well into the next decade – as we move boldly into the new era of aviation. We are dedicated to delivering new and unique airport retail experiences at the Lima gateway to South America.”
Along with the duty free shops at Lima Airport’s existing passenger terminal, Lagardère Travel Retail will work with LAP to define a new retail experience for LAP’s future terminal, due to open in 2025.