No competition with Duty Free at Auckland Airport

Using some interesting logic the Auckland International Airport (AIAP) is pushing ahead with its plans to allow only one duty free seller in the airport. This is despite the Commerce Commission refusing a bid by DFS to buy out it’s rival Regency Duty Free.

Bizarrely AIAP’s reasons for only allowing one concessionaire is:

“Overseas passengers would benefit from a wider range of goods offered by a single duty-free operator, and the move would make it more competitive relative to other international airports.”

http://stuff.co.nz/4595570a13.html

This morning on National Radio the CEO described the move as allowing “more depth and breadth in their offering”.

This is a load of rubbish. If this argument was correct then we should herewith ban all competition – only have one petrol company, one supermarket chain, one airline, and maybe even just one party in government – because this would allow that one provider to provide us with a better selection and offering… yeah right.

Anyone who has had the ‘pleasure’ of going through AIAP will know that competition between the two duty free operations is alive and well – alcohol being a good example. In addition only Regency (the loser in the airports plans) runs a fully functional ordering system online, the DFS website is a disgrace.

Both outlets offer everything you could expect from a duty free shop. You have to remember that most products in NZ are in fact already duty free, electronics etc only have GST on them. Alcohol and Cigarettes are the items with the most duty and excise tax on them, so any shop is hardly going to be stocking more items like electronics that can usually be bought cheaper domestically.

Having travelled a fair bit and compared prices and products in duty free shops around the globe I can assure AIAP executives that in fact the offering in Auckland is comparable with other larger airports when it comes to the main duty free items. The prices are also pretty good, especially the specials which result because of the competition here. Also I cannot recall an airport where there weren’t more than one outlet selling duty free items apart from at Yangon Airport, and this may well be the model that AIAP are using. The CEO maybe needs to actually get out of the office a bit more – competition is alive and well out in the real world.

Coincidentally the AIAP CEO came on the radio just after the Electoral Commissioner of Zimbabwe, and the Attorney General of Fiji, who were all using very similar logic arguing their particular situations were in fact quite sensible and suggestions to the contrary were miss-informed.

I can’t really believe that in this day and age anyone would honestly make such an argument, either AIAP managers think their customers are very stupid and lead sheltered lives, or managed actually have bought the line that complete lack of competition leads to diversity in offerings, lower prices, and more benefits to consumers. The third possibility is that they know it is complete rubbish, but that in fact they are going to make a bundle of cash from having one operator – if this is the case they should just say it, and not treat us as fools.

This behaviour from a monopoly supplier of a service in Auckland really just strengthens the case for another airport in Auckland, and maybe that this option is fading has lead AIAP to behave in a monopolistic way.

If AIAP is really serious about offering its customers better prices and products it should encourage another outlet, not reduce it to one. Cut the crap guys, if you are doing this to make more cash it’s going to back fire , treating consumers with contempt is a very bad strategy long term, and attempting to justify one duty free shop as better for customers is complete nonsense – I can guarantee the offering won’t get any deeper or wider. A monopoly player won’t be forced to innovate or be competitive and everyone will be a loser with this – including AIAP.

 

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