In a bid to streamline its non-aeronautical business, Mumbai International Airport Ltd (MIAL) has signed a memorandum of understanding (MoU) with Mumbai-based Travel Food Services (TFS) for food and beverage (F&B) space at its domestic terminals and some part of the international airport. Until now, MIAL deals with individual vendors on the piecemeal basis.
With food retail being seen as a value proposition at India’s airports primarily due to the low-cost airline trend, wherein meals do not constitute the in-flight services, coupled with the passenger traffic, the contribution of this segment to the airport’s revenue is expected to grow substantially. Airport retail operates largely in the F&B segment and luxury retailing, according to a KPMG report. The percentage of split of the aero and non-aero airports at MIAL is 40:60, respectively.
TFS will be the sole master concessionaire for all the F&B space at the Mumbai airport. It will have an area of around 35,000sqft at the airport, which will be developed in a phased manner. The first phase will be completed in six months. The MoU with MIAL stands for a seven-year period.
The company is also planning to bid for F&B space at the Delhi airport and other tier II airports. Master concessionaire is a concept that is prevalent at renowned international airports such as Frankfurt, Singapore and Dubai.
Say Rajeev Panjwani, chief executive officer, TFS, ?We will design and ascertain which brands can get into the F&B space at the airport.? The business model will include sub-leasing and franchising of F&B space at the airport. TFS will have a revenue sharing model with MIAL and with some of its leasees. All the brands looking at outlets at the domestic airport will have to go through TFS. Typically, airport rentals are significantly higher than mall rentals, which in turn are 1% of the total value of the mall project. “The rentals depend upon the location of the outlet. An outlet at the kerb side of the airport comes for cheap compared to one in holding area after security check,” said an industry expert.
To put things into perspective, a vendor with 3 outlets at the international terminal at Mumbai airport with an total area space of around 96 square feet pays Rs 3 lakh as lease per month.
TFS is looking to create 60,000 sqft F&B space in the next two years across India. The company is also looking at F&B space at major railway stations in the country. It is also looking at entering into in-flight catering services by next year for which it has tied up with Emirates Flight Catering. TFS with Emirates Flight Catering will be setting up a special purpose vehicle (SPV) for bidding for a facility in Mumbai. With this tie-up, TFS hopes to become an Asia player by 2014.
TFS is looking at revenues of around Rs 100 crore from both f&b and in-flight catering services by financial year 2010-11 (FY’11). The company will be investing around Rs 150 crore over the coming year in the ventures.