Consolidated annual duty-free sales of airports across the country are estimated to be around $500 million. Delhi and Hyderabad airport earn 30 per cent and 15 per cent of non-aeronautical revenue from retail and duty-free. These two airports have their own joint venture companies managing duty-free sales while airports in Mumbai and Bengaluru have appointed concessionaires to run the store on a fixed revenue share basis.
"Duty-free companies would have no other option but to cut down jobs and investments to survive, “ said Manishi Sanwal, former chief executive of Flemingo Travel Retail, which runs duty-free stores at twelve airports in India.
In fact, in its budget
recommendation to the government APAO suggested that the duty-free allowance of liquor be raised from two bottles to four for purchase at Indian airports
as this would help reduce costs for passengers and lead to enhanced revenue share to Airport Authority of India (AAI). Private airports share a portion of their revenue with the AAI.
Changes in duty-free allowance could also have an impact on upcoming investments in airports.
"Infrastructure companies have bid aggressively for new airport projects factoring a certain contribution from non-aeronautical revenue. If liquor allowance is reduced, it will impact their income and the companies will have to rework their revenue and investment model," an industry executive pointed out.