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Establishing Goals for the Concession Program 31
Source: OECD n.d., Table IV.1
Figure 3-4. Value-added tax rates for select countries (2010).
awarded to the highest bidder, driving prices higher and limiting selection to high-margin mer-
chandise. The result was high prices and low levels of service, usually in generic and utilitarian
concession units. While European passengers have long expected competitive pricing and good
value, the same has arrived relatively recently at U.S. airports, where changing customer percep-
tions on pricing and value have taken considerable time and effort, mostly in the last 20 years.
Local regulations can also make a difference. For example, by law, local shops in Amsterdam
must close at 6 p.m. and on Sundays, while the airport is exempt from this requirement. In
response, an extensive pre-security concession program serving the substantial numbers of arriv-
ing passengers and employees has been developed at Amsterdam Airport Schiphol. Frankfurt
Airport has similar advantages, including a license to sell alcoholic beverages after regular local
closing hours and on Sundays.
3.5.5 Airports in Asia
Asian airports also provide their passengers with good value. In addition to high consump-
tion taxes, excise taxes, and import duties, in many Asian countries, luxury brands are not widely
sold and are restricted to sale in a few department stores, limiting price competition. Cosmetics
are particularly expensive in Asia, and airport duty free shops offer a strong selection of brands
at attractive pricing compared with local department stores.
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32 Resource Manual for Airport In-Terminal Concessions
102% of retail value regardless of alcohol content
Korea
$23.62
Turkey
$19.37
Norway
$19.25
Australia
$16.42
Sweden
$11.66
Ireland
$9.00
United Kingdom
$9.95
New Zealand
$8.75
Finland
$7.18
Poland
$5.56
Czech Republic
$5.56
Belgium
$5.45
Hungary
$5.24
Denmark
$5.12
Switzerland
$5.04
Netherlands
$4.91
Slovak Republic
$4.76
France
$4.64
Greece
$4.43
Germany
$4.08
Portugal
$3.62
Japan
$3.44
Austria
$3.41
Luxembourg
$3.29
Spain
$2.92
Canada
$2.77
United States
$2.76
Italy
$2.02
Iceland
$0.00 $5.00 $10.00 $15.00 $20.00 $25.00
Note: “Whiskey” is assumed to be 40% alcohol by volume and 0.75 liter bottle.
Excludes beer and wine. VAT or sales taxes are additional.
Source: OECD n.d., 2009, Table IV.5.
Figure 3-5. Comparison of 2007 local excise taxes on liquor (in U.S. dollars).
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Establishing Goals for the Concession Program 35
Table 3-1. Example of a concession program SWOT analysis.
POSITIVE NEGATIVE
STRENGTHS WEAKNESSES
Strong origin-destination market Lack of post-security space to meet demand
Lack of utilities in some concession units limits cooking
Consistent long-term growth in traffic
and types of food concept s
Relatively good layout for concessions Lack of local food and retail concepts
INTERNAL FACTORS
Local economy growing at a faster rate than national
Surplus of pre-security space
economy
Strong interest in our concession program by potential
Some older concessions appear dated
concessionaires
Planned terminal expansion will provide new
Some concepts are weak, tired
concession spaces
Below average spend rate compared with benchmark
airports
High sales per square foot in post-security areas of
terminal indicate a lack of capacit y
OPPORTUNITIES THREATS
Additional low-cost airline service could stimulate Terminal expansion may dilute traffic in some areas of
traffic and concession sales the existing terminal, requiring rebalancin g
One airline is financially weak and may fail or be
Expiration of major concession agreements in 2013
EXTERNAL FACTORS
acquired, with unknown consequences in terms of future
allows time to plan a new program
passenger demand
Well known local food concepts could boost spend Lack of consens us on need for conces sion at Board
rates level
Low spend rate compared to other benchmark airports Current concessionaires may oppose program
shows good upside from an updated progra m expansion
Specific opportunities for more specialty coffee, more
specialty retail, and food court expansion
Source: LeighFisher.
Using the evaluation measures described in Section 3.3 and interviews with concessionaires
and peers at other airports, as well as industry consultants, the concession manager can develop
a set of attributes that helps define the current program.
This simple technique, used in many aspects of business analysis, can also help provide an eas-
ily understood snapshot of the current concession program that can be readily understood by
senior management, policymakers, airport staff, and other stakeholders.
Table 3-1 presents an example of a concession program SWOT analysis.
3.8 Common Concession Program Goals
For some, a statement of goals for the concession program may seem like a statement of the
obvious. However, during concession program planning and implementation, it may become
apparent that some concession program goals are in conflict with others. This section presents
an overview of some common concession program goals.
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