SINGAPORE: The DFS Group has decided not to retain its duty-free liquor and tobacco concession at Changi Airport when its lease expires in June next year, the company announced on Monday (Aug 26).
“Our decision not to bid was based on our unique understanding of the business environment as the current operator of this concession at Changi,” DFS Group chairman and CEO Ed Brennan said in a statement.
“Specifically, changing regulations concerning the sale of liquor and tobacco, against a global context of geopolitical uncertainty, meant that staying in Changi was not a financially viable option."
It was announced in this year’s Budget speech that duty-free alcohol allowance would be reduced to two litres from the current three litres. And from July 2020, all tobacco products in Singapore will be required to be sold in plain packaging with graphic health warnings covering at least 75 per cent of the packet.
“Although this decision is the right one for our business, it was not taken lightly,” Mr Brennan said.
“We sincerely thank the Changi Airport Group for their past support, and extend our best wishes as they take the liquor and tobacco concession operations forward in partnership with a new operator.”
About 500 people are employed at DFS's liquor and tobacco duty-free outlets at Changi Airport. Staff members will be offered options regarding their employment, which include deployment to other DFS concessions and working for the new operator, said a company spokesman.
DFS A "VALUED PARTNER": CHANGI AIRPORT
In a statement, Changi Airport’s group senior vice-president for airside concessions Ms Teo Chew Hoon said DFS was a “valued partner whom we have worked with at Changi Airport for the past 38 years”.
“We are disappointed that they have opted not to participate in this tender but we will work closely with them to ensure a smooth transition to the new operator for the liquor and tobacco concession," she said.
“We will also continue to work closely with them to grow their other concession businesses in Changi Airport.”
A tender for a new duty-free liquor and tobacco concession operator ended on Monday. Changi Airport said it received several submissions and will begin evaluating the bids.
The tender is expected to be awarded by the end of this year.
The Moodie Davitt Report, a publication which focuses on airport retail, named Lotte Duty Free, The Shilla Duty Free and Gebr Heinemann among those that have put forward bids to operate the concession.
The tenancy terms will cover 18 stores over 8,000 sq m of retail space across the airport’s four terminals. The new lease will run from Jun 9, 2020 until Jun 8, 2026.
DFS’ luxury concessions at Changi Airport, its operations at T Galleria by DFS and its Singapore Cruise Centre business will not be affected by the move.