converge in Abu Dhabi

Reach, Reliability, Respect Luxury and tradition converge in Abu Dhabi at bold new Terminal 3 ISSUE 41 MARCH 2009 Business commentary and analysis of key developments in the global airports and travel retail sectors for readers of The Moodie Report. All advertisements brought to you with Moodie Interactivity. Editor s Introduction: It s early February at Abu Dhabi International Airport, just two days after the soft first phase of the new Terminal 3 s carefully orchestrated opening. The Moodie Report is the first media to view the new facility and it s apparent, even at this early stage, that we may be looking at something special. Learning the lessons from some of the less auspicious terminal openings of the industry s recent past, Abu Dhabi Airports Company is taking its time here to get things right. Initially the new terminal dedicated exclusively to the country s national carrier Etihad Airways will be handling just three flights a day, with a phased step-up in the weeks and months beyond. As we tour the new terminal in mid-afternoon the workforce is back on the job (all T3 flights are currently operating in the morning), putting the finishing touches to many of the stores and rushing to get the SSP-run food & beverage area ready. But despite the ladders, the hard hats and the shrill symphony of the workmen s drills, what will surely rank as one of the world s most distinctive air terminals is taking shape nicely. I am very proud of Terminal 3, ADAC Chairman H.E. Khalifa Al Mazrouei tells me shortly before I make my site visit. I The Moodie Report PLUS is published by Moodie International. Please direct any comments to Martin Moodie by e-mail: Martin@TheMoodieReport.com Back issues can be found at www.themoodiereport.com inside this issue A new dimension in terms of airport terminals...1 Mirroring the government s 2030 vision...2 A Middle East debut for DFS Group...3 Balancing luxury and commodity...4 Getting the beauty offer right...5 Sharaf appeals to switched-on shoppers....7 Championing a Sense of Place...9

think it is going to put Abu Dhabi International Airport as a whole into a new era or dimension in terms of airport terminals, in terms of the uniqueness of its simplicity, luxury and convenience. H.E. Khalifa Al Mazrouei, one of the UAE s most highly regarded business leaders, insists that the terminal must be assessed within the wider context of Abu Dhabi s development as an emirate, particularly its 2030 Vision, whose key principles include enhancing transport links and fostering Emirati culture. Ever since it was created in 2006, ADAC has aimed to balance efficiencies, effectiveness and bottom-line orientation with an impressively unrelenting customer focus to ensure that travellers through Abu Dhabi discover an airport experience that encapsulates the government s vision. That vision embraces key concepts of culture (Sense of Place) and best practice. Throughout a long day of interviews with senior management from across the various ADAC departments, I am impressed by the sheer substance of the intellectual tone. Everywhere the emphasis is on quality and a word I didn t expect to hear so often respect. Big brand names, presented with space and style a typical hallmark of DFS lift the sunglasses offer to new heights Abu Dhabi wants to be recognised as one of the best five governments worldwide, says H.E. Khalifa Al Mazrouei, and its flagship airport must reflect that standing. That means succeeding at many levels, he insists. The effort is not only in the hard infrastructure of the airport, or the creation of a beautiful gateway; it s also in the service. And that means customer service, safety and security, and the efficiency of operations. in-house expertise to run those vital operations notably duty free, lounges, food & beverage, car parks and advertising? The answer was no, he says, and it was a question of Let s get the right partners in. So what have those partners delivered? Let s return airside to continue our tour of this fascinating new terminal. The airport must reflect Abu Dhabi s determination to be recognised as one of the world s best five governments, says H.E. Khalifa Al Mazrouei. That means succeeding at many levels, he insists. Key to achieving those ends is to get the mix of aeronautical and non-aeronautical activities (and revenues) right. And as the history of the airport industry shows, the two don t always go hand in hand. To grow Abu Dhabi International s aviation share in terms of passenger and cargo traffic, the ADAC Chairman knows the airport must keep its aeronautical charges as low as possible. Given the fiscal imperatives it faces, that leaves only one area for growth non-aeronautical activities. Driven by H.E. Khalifa Al Mazrouei, ADAC asked tough questions of itself. Did it have the 2

Open for business in the Middle East: DFS has delivered luxury and brands to Abu Dhabi Accompanied by ADAC Vice President Commercial Revenues Dan Cappell, I embark upon the journey that an Etihad Airways Business or First Class passenger would take through T3. Those check-in facilities, complete with comfortable sofas and even individual chairs for passengers at the desks, are as elegant as anything you will find in the airport world. In fact, for passenger read guest Etihad and ADAC are determined that this terminal should be an engaging and welcoming experience from the moment travellers arrive kerbside until they step onto the plane. As premium passengers pass through immigration and security they can see the lure of the retail offer on the other side. And what an offer it is. As has been well documented, most of the T3 shopping experience is in the hands of DFS Group, the world s leading luxury travel retailer. When ADAC appointed DFS as its exclusive duty free concessionaire in February 2008 the news rocked the Middle East travel retail sector. DFS had focused historically on either Asia-located or Asian traveller-frequented markets so its appointment marked an important geographic diversification for the retailer and a qualitative step change for ADAC. The airport had historically run its duty free operation in-house (as Abu Dhabi Duty Free). It was a successful and respected operation, of which Cappell himself was Deputy Managing Director from 2002 to May 2006. But by bringing in a specialist and DFS in particular, without an open tender both Cappell and H.E. Khalifa Al Mazrouei underlined their desire for change. DFS will raise the benchmark in luxury, promised Cappell at the time. And now, judgement time has arrived. DFS pledged to ADAC that it would deliver luxury and deliver brands. Although the retailer 3 took over the existing stores at T1 and T2 some months back, the new terminal represents the first real test of its pledge. Given that the company only really began to set up in this, a new

region, in July 2008, the early 2009 T3 deadline was one of the most daunting it has ever faced, especially as it was part of a whole new terminal construction. In creating a Galleria within an airport the company had to co-ordinate with some of the world s most demanding brands, source local sub-contractors, and start to put in place the tried-and-tested DFS systems that have served it so well to date. To drive that process it hired Eugene Barry one of the Middle East s most respected airport retailers, with experience at Dubai Duty Free, Dufry and Aer Rianta International Middle East. Despite the upscale focus, neither the retailer nor ADAC could risk a luxury only approach as adopted by DFS at its extraordinary new Galleria in Macau. With Abu Dhabi International Airport handling a large number of sub-continent-bound workers, for example, the product offer needed to be diverse and well segmented. And that s exactly what has happened here. There are Jimmy Choo and Rolex on the one hand, Tang and Nido on the other though clearly housed in different shopping neighbourhoods. ADAC Business Development Manager Bader Mohamed Al Rashedi with Dan Cappell outside the elegant stand-alone Bvlgari boutique Total walkthrough Once through security it s straight into a 100% walkthrough store, which begins with a choice of multi-brand corridors. To the left is a luxury line-up comprising on one side Loewe followed by Bally, Dunhill, Tumi, Montblanc and TAG Heuer. On the opposite side of this starstudded walkway is Fendi, a chic sunglasses boutique (which includes brands such as D&G, Fendi, Armani, Ray-Ban, Prada, Marc Jacobs, Burberry, Gucci, Coach and TAG Heuer) followed by Swarovski and a rare appearance at an airport Rolex. Cappell describes the area as the heart of the terminal, highlighted by a double void which is a cacophony of colour, life and fabulous branding and there s no doubting its impact. Home to the fragrances and cosmetics offer, it is distinguished by the Arabic flavour from the ceiling design to the latticework that frames the area in a purple light. Stunning, says Cappell. And it is. Everywhere the emphasis is on consumer engagement and impact. There Timely debut: Rolex makes a rare airport appearance and does it in style with DFS The latter epitomises the sophistication of what is on offer here and the depth of product ranging. The Rolex boutique includes both the Rolex and Tudor lines, displayed in a sumptuous environment which features leather cladding on the walls and classy lighting. Next up is the gold store, which has been concessioned out to local retailer Pure Gold, and a luxury watches boutique a category that as always sees DFS at its best in terms of brands, range and merchandising. Then the traveller reaches the central area of the terminal, a beautifully atmospheric focal point featuring richly distinctive architecture and design. 4

latticework and the distinctiveness of the design that it barely matters. It ranks, we believe, as one of the most elegant airport beauty stores in the world. It s a beautiful shop, notes one leading beauty supplier. It s a nice mix of understated personalisation, technology and impactful high-profile promotion areas. During our visit the back walls were awaiting the big brands visuals, which will draw travellers into the store. In the foreground smaller brands occupy two-way fixtures. Burger King leads a diverse food & beverage offer from SSP are multi-video walls, giant 4 x 3m lightboxes, and high-profile promotions in the public spaces. It almost doesn t feel like an airport at all; and yet the signage, easy passenger flow and flight information monitors everywhere leave you in no doubt. To draw comparisons with any other airport terminal would be invidious quite simply there s nothing like it in the world anywhere. The beauty offer is broadly divided into two areas. The main store is focused on fragrances, while most of the cosmetics and skincare offer is presented via a series of gondolas and other fixtures in the central area. Above the store giant screens are embedded into the marble surrounds, transmitting brand messages to the consumers below. The fragrances store has low ceilings but such is the intricacy of the The U-shaped gondolas are another new touch, featuring cosmetics at the front and fragrances in the back. The DFS brand-pulling ability is clear with a considerably strengthened product line-up including Lauder, Chanel, Dior, Givenchy and YSL. Other brands include Clinique, Lancôme, Guerlain, La Prairie, Clarins, Biotherm, Shiseido, L Occitane and Elizabeth Arden. From the middle of the central void an escalator and staircase lead up to the food & beverage village (run by SSP, but unfinished during our visit), which offers a diverse consumer diet from Burger King to Lebanese food to Asian cuisine and even an Espresso bar (we ll profile the F&B offer in full in our special T3 supplement, out in coming weeks). The perfect promotional vehicle: DFS will offer a range of luxury motor cars to drive revenues and awareness 5

A mix of stand-alone boutiques, traditional categories and a distinctive, cohesive design all add to the flavour of this remarkable terminal. (Clockwise from top left): An elegant Chivas Regal display; Tumi, Montblanc and Hugo Boss boutiques; and the lovely Arabic lattice effect that holds it all together 6

Specialist technology retailer Sharaf has enabled ADAC to significantly enhance its offer in this sector Sharaf is another new concessionaire. The Dubai-based electronics and consumer technology specialist has made a strong impression at the airport since winning a three-year contract in January 2008 and Cappell is full of praise for the incremental revenues it has driven. Its store here is light, bright and clean, with a tremendous range of skus that ADAC admits it simply could not have matched if the category had continued to be run in-house. Close by is a Relay outlet the Lagardère Services-owned brand trading here in a joint venture partnership with powerful local market retailer Jashanmal. Nearby stands a Boots pharmacy another first for a Middle East airport. Everywhere, Cappell points out, ADAC has opted for best of class. Around this area the consumer also finds a number of ATMs, public telephones and the Service-orientated Sharaf woos switched-on shoppers Sharaf may be new to the travel retail sector but the Dubai-based company is one of the Middle East s most respected consumer technology specialists. E-retailing Head Manish Parashar says the company is delighted to be part of the new Terminal 3 offer at Abu Dhabi International Airport. The facilities at T3 are state-of-the-art, and the airport s local ambience makes it look great, he tells The Moodie Report. The shopping area resembles a world-class boutique, and has been planned and conceived very well. Such a platform offers Sharaf great opportunities, he says. It gives us a good window to serve international passengers in a great environment the whole place has come out really well. Parashar says that electronics is growing very fast as a category. We see it occupying the number two or number three position in coming times, he notes. So what are the hallmarks of the Sharaf offer? Parashar replies: Sharaf is known for Best prices Widest choice Trusted service, so we strive to achieve this. Although the electronics category is very demanding, our best practices and state-of-the-art ERP system allow us to control inventories in the best possible way. 7

Bureau de Change facilities, which are run by Travelex. ADAC is particularly enthusiastic about what DFS has achieved in the liquor and tobacco environment, which includes a walk-in humidor and a tasting bar the latter being one of the hallmarks of the same retailer s acclaimed wines & spirits operation at Singapore Changi Airport. The tasting bar is fantastically positioned... right at the front for promotional activity, says Cappell. It is a combination of branded units and generic fixtures, and the latest liquor and tobacco fixtures feature videos built into the display units, which in turn interact with the promotional activities. There s a strong emphasis on premiumisation here there s a gorgeous showcase for Johnnie Walker Blue Label King George V Edition, for example and the wine offer evokes the feel of a cellar with its wood finishes and laid-down bottles. As the consumers emerge from the double voided area towards the gates they encounter the food, confectionery and destination merchandise environment. It was early days during my visit but already it looked splendidly merchandised. Brands such as Kit Kat, Toblerone, Ferrero, Galaxy, Cadbury and Mars, Quality Street, M&M s and Celebrations all enjoy a high profile that reflects the category s importance in the Middle East and the airport s passenger profile. There are plenty of value messages (Ferrero s Buy 3 get one free, for example) and due prominence is given to value items such as Nido, Tang and Foster Clark s. DFS understands the importance of confectionery in the Middle East and has given due prominence to popular international lines Cappell and I now turn and walk into the luxury boutique avenue, stopping to admire the high and intricate ceiling. This area is stylish and sophisticated, featuring a dazzling array of boutiques, including the latest Bvlgari fit-out. The blend of traditional duty free shopping, just a few yards away, with consummate luxury, is achieved seamlessly. That sense of cohesion is everywhere, from the points of sale to the boutique corridor with its common Arabic fascia. The brands enjoy a strong presence, but they are clearly delineated as part of a greater whole. The boutique area also boasts a beautiful chandelier and a ceiling painted with a 24ct gold leaf effect. Walking back we stroll past Polo Ralph Lauren, followed by Hugo Boss, Coach, Ferragamo, Chloé and Cartier (the first brand you would see post-security). On the other side Hermès leads the way post-security, followed by Bvlgari, Burberry and Jimmy Choo the luxury footwear brand makes its airport debut here. Within the wide central aisles, designed to maximise circulation, illuminated and delightfully merchandised display pods Traffic growth slows, but the momentum is still upward Abu Dhabi International Airport recently announced a +10% year-on-year gain in passenger traffic for January to 811,530. The robust result, coming against a backdrop of aviation industry turmoil and global financial crisis, follows a +30.2% rise in passenger traffic to 9.02 million last year at the UAE capital s gateway. Abu Dhabi Airports Company Chairman and Managing Director Khalifa Al Mazrouei commented: We have said all along that, even during buoyant market conditions, growth rates such as we have seen [+30%] over the past two years were not sustainable indefinitely. But we are pleased that, in light of the added challenge of the global economic slowdown, we remain an airport of choice and have continued to realise doubledigit growth. 8

Every picture tells a story as Sense of Place is evoked Many airports talk the talk about the concept of Sense of Place, but Abu Dhabi Airports Company is literally walking the walk with a breathtaking display of Arabic culture, crafts, cuisine, history, heritage and humanity in the transit area between Terminal 1 and the new Terminal 3. The long walkway houses an amazing array of giant photographs that emphasise the traditions of Abu Dhabi. ADAC Chairman Khalifa Al Mazrouei is rightly proud of the concept, and of the quality of its execution. I told the team: We know the tradition, we know the culture, and so let s show people. It s not just a poster on a wall. As people travel through... we can say Here is the desert; here is the camel; here is the falcon; here are the people; here s how they used to live; here s a woman cooking; here s how they used to cook. Here is what it was; here is what it is today; here is what is coming. Basically, he continues, you read about Abu Dhabi on the walls of Abu Dhabi International Airport. This is unique. But you re not just reading walls. You re reading history, you re reading culture, and you re enriching your understanding about Abu Dhabi. And through this I am hoping that it gives you the Sense of Place, and that you will say Yes, this is Abu Dhabi International Airport, it s different. That s exactly what thousands upon thousands of passengers will be saying as they stop, stare and admire this stunning picture gallery. What a welcome change from the drab transit zones that typify almost every airport in the world. Here, every picture tells a story. offer a glimpse of what is to come in terms of brands and imagery. Cappell is anxious to see the finishing touches put to the offer, particularly in F&B. He concludes that this has been a fantastic team effort and singles out ADAC s James McLean and Sulaiman al Siksek specifically for their contributions. It is noteworthy that many of his long-held Trinity principles have been championed and well-executed within this landmark project. The quality of some of the work in the ceilings is simply amazing, he muses, pointing upwards. There s a combination of different heights, lighting, materials, textures and feelings. And the way that the whole terminal is actually pulled together through the ceilings, the flooring and the fascia element going all the way around really does make this something quite spectacular. Coming soon In coming weeks The Moodie Report will produce a special print supplement dedicated to Terminal 3 at Abu Dhabi International Airport. Including interviews with Chairman Khalifa Al Mazrouei, senior Abu Dhabi Airports Company management, T3 concessionaires and Etihad Airways, the report examines the terminal s commercial offer and philosophy, the customer experience, and the guiding principles of best practice, Sense of Place and respect that are central to ADAC s development. 9