Dubai Duty Free bucks downturn

Dubai : Passengers travelling through Dubai International Airport, the largest in the Middle East, on average spend Dh107.82 shopping at Dubai Duty Free (DDF).

Last year, DDF generated $1.1 billion in sales, which is five per cent of the global airport duty free business of $21.8 billion.

In 2008, about 643 million travellers flew worldwide, spending $21.8 billion at airport duty free outlets. That translates to $33.9 per capita spend.

Launched in 1983 by a group of Irish consultants, assigned by the then Department of Civil Aviation, DDF has become a major player in Dubai's economy. Thousands of suppliers now benefit from its sales, indirectly supporting jobs.

Perfumes, liquor, cosmetics, gold and electronics are the most popular items sold at the DDF.

The success of DDF is the result of high passenger traffic, backed by the solid growth in Emirates' expanding operations that are adding more than one wide-bodied aircraft per month to its fleet of 140. The airline expects to have about 150 planes by 2016-17.

Aviation hub

More than 123 airlines connect Dubai to 210 global metropolises carrying passengers to and from Dubai, which boosts sales at the airport outlets.

DDF became the largest airport retail operation in the world for the first time ever recently, surpassing South Korea's Incheon and London Heathrow.

However, due to the current economic situation, the number of travellers is expected to decline to 600 million according to the World Travel and Tourism Council (WTTC), reducing sales at the airports. DDF, however, is optimistic about the future.

In fact the whole of the Middle East only accounts for 6.7 per cent of travel retail sales, making DDF by far the largest travel retailer in the Middle East.

Travellers increase

Dubai International Airport has been defying the global downturn, registering year-on-year passenger growth. Passenger traffic in November rose 12.6 per cent over that of November 2008.

November is the sixth month in a row to experience this growth.

Dubai also seems to be one of the only economies experiencing this growth; global passenger traffic is down nearly five per cent.

In October, passenger traffic in Africa fell 2.6 per cent, in Asia Pacific it fell 6 per cent, in Europe it fell 1.9 per cent and in North America it fell 1.3 per cent.

Paul Griffiths, CEO of Dubai Airports, thinks despite the global fall in passenger traffic, the trend of increasing passenger traffic in Dubai International Airport will continue.

"We are bullish about our future prospects and expect to hit record levels of traffic this year with 40.6 million passengers and again next year with over 46 million passengers."

Due to this increase in passenger support Dubai Duty Free is actually prospering, in stark contrast to what many people thought would happen.

According to Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority and Chairman and Chief Executive of Emirates Airline and Group, the Middle East was the only region where sales grew in the first half of this year.

Forecast

Colm Mcloughlin, managing director of Dubai Duty Free, predicts a four per cent increase in total sales by the end of this year, which would mean that sales would increase from $1.1 billion to almost $1.15 billion, allowing Dubai Duty Free to retain its place as the world's largest airport retailer.

"Dubai Duty Free is definitely one of the best duty frees in the world, it has the widest range of products available in a duty free, and is a modern success story," says A.S. Lal, who runs the Sharjah-based Kreol Trading, supplier of goods to duty free outlets.

"I think that it is no surprise that Dubai duty free is still doing well. I think in about two years duty free will begin to flourish worldwide once again."

Dubai Duty Free has been voted the ‘Best Duty Free Shopping' in the world.

DDF balance sheet

Global sales: $21.8 billionDubai sales: $1.1 billion

Category Sales Percentage of total sales

Perfumes Dh560 million 14 per cent Liquor Dh517 million 13 per centGold Dh448 million 11.36 per cent