KEY POINTS:
Martin Moodie spends half his working life on planes seeking airport shopping.
The editor and publisher of airport industry intelligence service The Moodie Report was in Auckland last week to check airport retail expansion plans.
Opportunities at Auckland were considerable so the merger interest from Dubai Aerospace Enterprise
(DAE) was not surprising, Moodie said.
"They [DAE] announced themselves on the world market last year to great fanfare and they haven't really done anything yet. They've been clearly looking around, trying to find the right sort of targets and they're extremely ambitious."
The board of Auckland International Airport last month backed DAE's merger proposal offering of $3.80 a share in cash, scrip and dividends.
Macquarie Bank was in talks with the airport last month, while Canada Pension Plan was understood to have begun due diligence and Melbourne airport owner Australia Pacific Corporation also touted as a possible buyer.
The chairman of DAE, Sheikh Ahmed Bin Saeed Al Maktoum, is also the chairman of Emirates and Dubai International Airport.
"He's not a dummy and he makes things work, he understands tourism and he understands aviation and he understands retail," Moodie said.
"So with all that floating in the mix you've got to say that's a serious investor come calling."
An $85 million expansion of Auckland's international arrivals area, due for completion by next April, would double the arrivals duty-free retail space to 1600sqm. Historically, retail had been an after-thought at airports.
"The airports were built and then they shoved some shops in the corner," he said. "But in the last 10 years what you've seen ... is that the retail actually takes pre-eminence when you're developing an airport because it pays for the infrastructure development."
In the financial year ending June 2006, more than half of Auckland International Airport's $305.8 million revenue was non-aeronautical, with retail income of $86.7 million.
Moodie said the duty-free industry was worth US$29 billion ($41 billion) worldwide. Add food, beverage and other commercial revenues and it was over US$100 billion.
Auckland airport's expanded international arrivals shopping area would be among the biggest in the world.
Many countries, including the European Union, do not allow arrivals shopping, mainly because of resistance from local retailers.
Airports watched each other to see how they presented their country and the commercial offerings, he said.
"Probably they'll be watching to see if this huge capital investment in airport arrivals retailing will pay off."