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Increasing Retail Revenues

Fraport plans passenger spending rise of at least 33 percent by 2014

Kevin Rozario  Jan 14, 2010

The owner and operator of Frankfurt airport, Fraport, mainland Europe’s second biggest hub, is targeting a big rise in passenger spending in the coming four years and expects to increase the current €2-3 average spend from each of its 53.47 million passengers to €4 or more by 2014.

According to Fraport CEO Stefan Schulte, numbers should hit 60-65m by then, increasing its retail take to at least €240m from a wealthy customer base: 43 percent of Frankfurt passengers come from households with incomes of greater than €4,000 per month.

Fraport needs to increase retail revenues substantially to pay for the huge modernization and expansion projects now in place at Frankfurt. These are estimated to be costing about €1 billion annually. In December, Schulte also announced preliminary plans for higher aeronautical fees (see eTN December 1) for the period to 2015 to pay for the development work.

To get travelers to spend more, part of this infrastructure will include new retail facilities. For example, the new €500m 185,000sq m Pier A-Plus at Terminal 1, expected to be finished in April 2012, will accommodate wide-bodied jets including the A380 and is set to have two large walk-through stores. The pier’s 23 gate lounges will be exclusively used by Lufthansa and will have a capacity of up to six million passengers per year.

Most recently, retail concessionaire, Gebr Heinemann, opened a 750sq m duty-free concept store in Terminal 1B that is widely expected to be a blueprint for similar shops across German airports. Fraport also opened its first landside shopping plaza in Terminal 2 in the same month. Meanwhile, its City Mall development that links its rail facility continues to be filled with more retail stores including a new car rental center.

Schulte said: “We derive more than 50 percent of our profits from retail and real estate, and we intend to increase speding per passenger in the next four to five years. Retail is core to our business model.” In fact, in terms of EBITDA in 200,8 which was €600.7m, retail and property contributed a whopping €367.9m (61.2 percent) compared to aviation’s 20.8 percent.

Fraport plans passenger spending rise of at least 33 percent by 2014
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