AER Rianta International has won a major contract to develop the first ever duty free shop at Beijing International Airport in China.
The open ended contract is with the China National Duty Free Merchandise Corporation and could be extended to cover other state owned airports in China, according to Aer Rianta.
The chief executive of Aer Rianta, Mr Derek Keogh, said the contract was a "major strategic development" for the company. "We will be the first company to become involved in a duty free operation in China and we are delighted to have this opportunity," he said.
Aer Rianta International will supply a number of services to Beijing Airport including retail management, business training, marketing and development. It will receive an unspecified annual consultancy fee, based in part on turnover at the new duty free shop.
The company stationed an executive in Hong Kong earlier this year to explore the Chinese market, and the new operation will be managed from the British colony.
Beijing Airport has a throughput of about five million international passengers per year, but the concept of duty free shopping has yet to be introduced there. Aer Rianta International will help transform and expand the existing shop in the airport and plans to open China's first duty free outlet within four months.
Industry sources believe the new duty free shop in Beijing could generate sales of $20 $25 million (£12.5 £15.6 million) during its first year of trading, but turn over is expected to grow significantly over the next few years.
Turnover at Aer Rianta International grew from £112 million to £147 million last year, and this is expected to grow to about £180 million during this year as a number of new operations including the Chinese venture come on stream. The company has a staff of about 160 and employs a further 1,500 people through joint ventures and associate companies.
The expansion into non European duty free business is crucial for the company as it expects the end of European Union duty free sales in 1999 to cost it about £20 million per year.
The China contract comes a year after Aer Rianta International secured the contract to run a downtown duty free shop in Bangkok's new World Trade Centre. The company also has interests in duty free shops in Moscow, St Petersburg, Kiev, Karachi, Kuwait, Bahrain, on the Finnish Russian border, and at either end of the Channel Tunnel.
Meanwhile Aer Rianta International has said it hopes to conclude the purchase of a 40 per cent share in Birmingham International Airport within the next month or two. The Irish company and its partner will pay an undisclosed sum, understood to be about £60 million, for its minority stake in Britain's fifth largest airport.
Aer Rianta International and the London based venture capital company NatWest Ventures were selected as the preferred bidder for the airport last September by the seven local councils which own Birmingham Airport.
NatWest Ventures will provide the bulk of the finance for the project and will hold an undisclosed equity stake in the airport. Aer Rianta International has yet to say how much it will be investing in the purchase, but the sum is believed to be about £3 million.
