Lagardère wins Lima DF concession with pioneering profit-sharing business model

Travel retail operator Lagardère and Lima Airport Partners (LAP) have announced that the French company will take over the master duty free concession at Jorge Chavez International Airport in Peru. The two companies signed a long-term agreement that goes into effect from January 2022. LAP is part of the Fraport Group.

The concession contract is based on a pioneering profit-sharing concept. This is the first large-scale implementation of a business model that has been widely discussed in the industry to better balance risks and benefits between the airport and retail operator. The goal is to unleash growth potential, even more relevant in the context of the COVID-19 pandemic and the resulting drop in global air traffic, said the two companies. 

Lagardère has taken the business from Swiss based Dufry who has operated the duty free stores in Lima since 1994 via Aldeasa, World Duty Free Group and most recently as Dufry Peru.

Lima Airport is one of the busiest hubs in Latin America with pre pandemic traffic of 23.6 million passengers in 2019.

The 13-year concession will  launch the duty free brand Aelia across 3,000sq m of retail space in the current terminal and will be expanded to include the new Passenger Terminal, construction of which is expected to begin in the second half of this year, with completion expected by early 2025.

The innovative profit-sharing agreement sets new standards that both partners hope to capitalize on during an environment of uncertainty in the post-COVID consolidation period. This retail model, which has come into sharp focus during the crisis, has been discussed for several years as a necessary evolution to maximize sales potential and to introduce greater balance and new opportunities in the way risks and benefits are shared between parties, according to the concession announcement. 

The profit-sharing agreement will open up significant revenue potential for both Lagardère Travel Retail and LAP, as well as greater investment opportunities – ultimately benefitting travelers and enhancing the airport experience at the popular Lima Airport hub, they note. 

 “We are thrilled to have found in LAP a like-minded partner who has demonstrated the most innovative and pioneering way of thinking, from selecting an operator via an innovative Partnership Selection Process up to the contract terms,” said Dag Rasmussen, Lagardère Travel Retail Chairman and CEO.

LAP CEO Juan Jose Salmon added, “In the middle of the pandemic, Lima Airport Partners has successfully negotiated a pioneering partnership that brings a renowned and long-term partner to Lima Airport. Lagardère Travel Retail is renowned for its strong commitment and extensive expertise in travel retail and duty free. Our cooperation with Lagardère Travel Retail fits fully into our vision-of-the-future for airport retail.

Monday’s announcement is another major victory for Lagardère in Latin America following the company’s tender win in February to operate 20 food service outlets in Arturo Merino Benitez International Airport in Santiago de Chile.