Aer Rianta keen to mop up Moscow airport duty-free

The Irish Independent

By Jason Corcoran in Moscow

Thursday August 09 2007

THE overseas arm of Aer Rianta has confirmed it will compete with Russian state airline Aeroflot for control of a duty-free business in Moscow's main airport, Sheremetyevo.

Aer Rianta International, a subsidiary of Dublin Airport Authority, is a partner in a three-way business with Aeroflot and Sheremetyevo Airport Authority, which is selling up to concentrate on its core activities.

Eamon Foley, director general of Aer Rianta International, said the Irish operator is interested in bidding for Sheremeteyvo's stake outright or splitting it equally with Aeroflot.

Speaking in Moscow, Mr Ryan said: "We have a very comfortable relationship with our partners and we have built a very strong partnership with Aeroflot. Our joint venture is built on strong foundations and it benefits both parties.

"We bring an international dimension, and globally we have a huge buying power which our local partners do not have. There is no official sales process yet, so we are not clear how it will go."

A spokeswoman for Aeroflot said the airline was also interested in bidding, but much depended on the terms and the price. "It's too early to speculate on price and the negotiations which are just beginning," she said.

A former manager at Sheremetyevo suggested the 33.3pc stake could fetch $15m, while Aer Rianta is understood to think $12m is a fairer price.

The Aerofirst business consists of duty-free shops at Sheremetyevo-2 international terminal, as well as the Irish bar and the AeroShop onboard stores.

Sales at the location are close to $100m a year, although Sheremetyevo is facing intense competition for passengers from rival Moscow airports Domodedovo and Vnukovo.

Mr Foley declined to discuss the operation's profits, but said its principal asset is its concessions rights, which are due for renewal in a couple of years.

He hinted the Irish airport operator could also be interested in taking stakes in Russian airports, which are to be revamped under Russia's first major programme of public private partnerships (PPPs).

"We have experience as an equity investor in airports as well as airport management," explained Mr Foley.

"President Putin made investment in infrastructure such as airports a centrepiece of his recent State of the Union speech and we could yet be involved in that way."

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