20080510

Fly By Cochin

Kochi Duty Free

The airport’s duty free shop is pandering — at passengers’ expense — to one company’s monopoly on purchasing, reports KA SHAJI in Kochi

YOU CAN privatise, but if you can’t provide any competition, then you might as well privateer. With two million Malayalees working abroad — but returning regularly to visit family and friends in Kerala — the Cochin Duty Free Shop caters to a captive customer base with an aggressiveness that borders on self-aggrandising.

Averaging a daily sale of $17,000 (nearly Rs 5 lakh), it contributes a healthy 25 percent of the revenue of the Cochin International Airport Limited (CIAL).

What it doesn’t provide is competitive pricing. Take the price of that benchmark brand, Johnny Walker Black Label. On May 5, 2008, at the Delhi Duty Free, a one litre bottle was selling for $29, with an offer of two bottles for $52 — there weren’t many takers for single bottles. Cochin Duty Free had a regulation price of $30 per bottle, with no special offers, the same night. If a dollar a bottle doesn’t seem much (even if you forget the offer), think of 20,580 cases of Red and Black: it’s a lot of dollars.

The problem, says sources, is that the Cochin Duty Free is not permitted to purchase liquor (or anything else) on its own. It must place all its orders through a foreign company. “Who benefits from such a mode of purchase? It is neither the state exchequer nor the airport company,” alleges a senior executive of CIAL. Look at the figures: Nuance, an Australian company and a private duty free operator, gets Johnny Walker Black Label at 80 GBP a case and Johnny Walker Red Label at 42 GBP per case. Cochin International Airport, however, pays 123.26 GBP per case for Black Label and 55 GBP per case for Red Label.

CIAL imports an estimated 21 containers of these two brands every year. According to rough estimates, in the six years that CIAL has run the airport, its losses due to just these two popular brands amount to Rs 25 crore.

As always, who gains? Those involved in the purchase and the foreign company that has the contract: WRITER’S E-MAIL shaji@tehelka.com

Alpha Kreol Limited, a subsidiary of the UKbased Alpha UK and the UAE-based Kreol Group. The decision to purchase products through Alpha was taken by CIAL’s board after inviting a global tender. It’s now the ‘sole and exclusive' management consultancy of the Duty Free Shop at Cochin International Airport. Alpha refused to comment on the difference in import and sale prices.

“It is surprising that the Chairman of CIAL is the chief minister of Kerala and his government has not taken any action on these malpractices,’’ points out a regular customer.

CIAL authorities, on the other hand, aver that the contract with Alpha has benefited the company. “Alpha runs over a dozen duty frees, the world over; their competency is helping us do good business,’’ CIAL’s general manager (commerce) Suresh Babu told TEHELKA, claiming that “Ours is the cheapest price, compared to other duty frees”.

When asked about price variations, he said that it was not his duty to make available the price list from other duty free shops around the world. “According to my knowledge and belief, we are selling all liquor brands at lower rates. You should go to Dubai or Bahrain to verify this,’’ he added. Actually, one only needed to check in Delhi.

Actually, one only needed to check in Delhi.


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