The airport company has committed to Romania’s Competition Council to complete the tender and designate the winners until July 31, 2022.
Fondul Proprietatea said in a statement that CNAB did not take the necessary measures and delayed the organization of the tender by almost ten months. This led to the extension of the contracts with the existing companies that manage the retail spaces for a period of six months, until June 30, 2023. “This action was taken despite the opposition of Fondul Proprietatea, expressed, through a negative vote at the Extraordinary General Shareholders Meeting of December 5, 2022. There is a significant risk that these contracts, which are financially disadvantageous for CNAB, shall be extended again if the tender is not completed by the date on which they are due to expire.”
The commercial premises in Bucharest Airport represent an important source of income for CNAB. Delaying the organization of the tender has a negative impact on the company, as it deprives it of potentially higher revenues. Moreover, airport passengers are denied better use of these premises, through increased diversity and improved services in the retail and food catering.
“Fondul Proprietatea is deeply disappointed with the lack of implementation of corporate governance and mismanagement issues within CNAB, as highlighted by the way the company handled this tender. We are concerned about the lack of interest shown by CNAB in the transparent and competitive operation of these commercial premises, as this is a very important issue for all stakeholders, including passengers and company shareholders. We urge CNAB to take all the necessary steps to finalize the tender in a transparent manner,” said Johan Meyer, CEO of Franklin Templeton Bucharest and Portfolio Manager of Fondul Proprietatea.
Fondul Proprietatea requests the following from CNAB, in order to mitigate the negative impact on the company: to observe the commitment made to the Competition Council and take urgent measures to finalize the tender as soon as possible; to assess alternative models of managing the commercial premises at AIHCB, such as implementing a royalty system based on a percentage of revenue, similar to that used by other international airports; to perform a restructuring of CNAB with the objective to establish a clear decision-making mechanism, the creation of a functional framework for identifying and sanctioning conflicts of interest, as well as for holding employees accountable for non-performance; to reorganize the recruitment process to prioritize the selection of professional and competent employees and avoid the perpetuation of existing conflicts of interest.
On October 27, 2010, CNAB concluded two profit sharing agreements for the management of its commercial premises with two companies: one for food&beverages and the other one for travel retail activities (mainly duty free). These agreements have expired on December 31, 2022.
In October 2016, the Competition Council launched an investigation into a possible anti-competitive agreement between CNAB and the two companies that managed the commercial spaces.
In 2019, during the peak year in passenger traffic at AIHCB, CNAB received revenues from commercial spaces in the equivalent of approximately 22% of the sales resulted from food&beverages premises, and only 7% of the sales resulted from travel retail premises. According to a market study presented by CNAB, the average percentage of sales collected by European airports comparable in size to AIHCB in the period 2018-2019 was 22.6% for food&beverages activities, and 28.6% for duty free sales.
According to the Competition Council decision no. 69/06.10.2021, CNAB assumed the following commitments in October 2021: to identify and approve the optimal model for operating its commercial premises – deadline 30.11.2021; the acquisition of consultancy services for the upcoming tender – deadline 28.02.2022; to set the requirements for the upcoming tender and potential draft agreements – deadline 04/30/2022; to conduct the tender and designate the winners – deadline 31.07.2022.
On December 20, 2021 the CNAB Board of Directors approved the initiation of necessary measures for the tender of commercial premises for food&beverages, respectively travel retail activities. On October 27, 2022 the CNAB Board of Directors called the General Shareholders’ Meeting of CNAB with the proposal to extend the two expiring contracts by six months.
On December 5, 2022, following a decision of the CNAB General Meeting of Shareholders, the two contracts were extended for six months, until June 30, 2023.