Los Angeles Business Journal

DFS Group Wins LAX Contract

By Deborah Crowe Tuesday, August 7, 2012

DFS Group LP, the current operator of duty-free shops at Los Angeles International Airport, has been awarded a sought-after contract to continue operating the shops for at least 10 years.

The Los Angeles Board of Airport Commissioners late Monday made the decision after reviewing a protest from one of the seven losing bidders, Swiss retailer Nuance Group. Nuance alleged that airport staff improperly favored the incumbent contractor in its staff recommendation, the Business Journal earlier reported.

DFS in April announced a cross-marketing deal with AEG, the company that owns and operates Staples Center and LA Live. It was among several operators that made local alliances to bolster their bid. Rick Caruso’s shopping center development company, Caruso Affiliated, made a cross-promotion deal with a group headed by Shilla Duty Free, part of Seoul, South Korea’s Samsung Group conglomerate, and Aer Rianta International, owned by Ireland’s Dublin Airport Authority.

The contract covers 38,000 square feet of duty-free and duty-paid retail space in all LAX terminals, including a 14,000-square-foot shop in the new Tom Bradley International Terminal. Over the 10-year base term of the contract, duty-free sales at LAX could total $2 billion. The contract also includes three one-year extension options.

DFS is a subsidiary of Paris luxury company LVMH Moët Hennessy Louis Vuitton S.A. It has operated duty-free retail shops at LAX for more than 30 years. The shops market and sell traditional duty-free merchandise, such as spirits and wine, fragrances, cosmetics, and tobacco products. In addition, DFS will add electronics and fashion-branded boutiques and high-end, specialty duty-free stores offering international brand-name merchandise.