KEY POINTS:
Auckland Airport is promising that travellers stocking up on duty free liquor and perfume won't pay the price for it handing its duty free shop licence to a single operator.
Yesterday it announced DFS Galleria will spend more than $18 million to redevelop and expand the range of duty free stores at the airport as part of an agreement that sees it as the sole duty free operator from 2009.
Regency Duty Free - also currently operating in the airport's international terminal - said it was saddened its bid to stay had failed and cited a "superior track record" because of its larger market share.
A spokeswoman said the company did not know if jobs would be lost but it was "business as usual" for the next two years.
Auckland Airport chief executive Don Huse said the contract with DFS included measures to ensure prices were competitive.
Cutting the number of operators from two to one did not reduce competitiveness because the provider competed with shops in other locations, Mr Huse said.
"Independent research tells us that travellers compare on-airport duty free prices to local high street prices, online shopping, parallel import retailers and overseas retailers.
"A key factor in duty free shopping is price - that is why we, along with DFS, are so committed to price comparisons."
He said many international airports used single operator models for their duty free shopping, including Sydney, Singapore, Hong Kong and Christchurch.
With two operators, Auckland was the exception to convention, he said.
Mr Huse said the 12 million travellers annually that used the airport would begin to see changes next year.
The range of items for sale would be broadened because fewer goods would be duplicated, he said.
In the expansion plans were specialist electronics, watch and beauty stores and New Zealand product areas selling wines, food, souvenirs and health products.
The Collection Point service, which allows off-airport duty free and tax free sales for nearly 160 retailers throughout New Zealand, will remain.
The duty free licences do not expire until mid 2009 but the tender was run this year before an $85 million expansion in the international arrivals terminal. The duty free shop space in arrivals will double to 1600sq m, making it the "most extensive arrivals duty free in the Asia Pacific region".
He did not say how much is spent at the duty free, citing commercial sensitivity.
