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21 Feb, 2008 05:54

Let’s go shopping – at the airport!

Airports around the world are turning into shopping centres, and Russia is no exception. Moscow's airports are being redeveloped, with more shops and services for passengers. The ambitious plans could make the Russian capital a new trans-continental hub.

Russia's international airports don’t have the best reputation in the world when it comes to passenger comfort and user friendliness. Some of them retain the look of a Soviet-era check-point – and a management structure to match.

But that's changing. Moscow's state-owned Sheremetyevo is building new terminals, runways and passenger transport links. Part of the “master plan” is renovating terminals to capitalise on the booming retail sector.

“The whole point of new terminals is to create better opportunities for retail and catering. At least thirty per cent of our new terminals’ space is suitable for commercial use,” said Dmitry Kalinin, Sheremetyevo International Airport CFO.

He also added that a new master plan would provide even more opportunities for both air-side retail and land side retail.

Moscow's Domodedovo, run by the East Line Group, has raised the bar. Subsidiary companies dedicated to commercial real estate and hotels have turned the airport into a successful retail operation.

Other airports have a long way to go before they reach the global average of fifty per cent of revenue coming from non-aviation sources.

“The aviation part of the revenue for an airport is declining significantly. Each airport is trying to increase the retail portion or non-aviation portion of their revenue. If you look at Moscow for example, Domodedovo is paying great attention to retail. Sheremetyevo’s just starting, and I’m sure the new terminal will focus on non-aviation revenue for the airport,” said Andrey Timofeev from AT Kearney.

Analysts say Sheremetyevo has yet to master travel retail tricks like diversifying away from the traditional and declining duty-free sectors of tobacco and alcohol and moving into gifts, entertainment, communication, confectionaries and food.

The revenues earned could promote the improvement of other airport operations including parking, ground transportation, accommodation and electronic ticketing and check-in.