ATU DUTY FREE MODEL &

THE CONCESSION STRUCTURE OF THE FUTURE

AHMET KÖTEHNE OPERATION UNITS & BUSINESS DEVELOPMENT DIRECTOR

AGENDA

Privatization – Catching the Wind

ATU Duty Free’s Business Model

Key Challenges of Collaboration

The Next 25 Years

Contribution to the Economy

Q&A

PRIVATIZATIONS

Privatization – Catching the Wind

Change in theTurkish government’s vision towards privatization in the 80’s

More attractive political and economic environment for investors (especially 2000’s)

Being there at the right time

Stability in Turkey despite global crisis

1985 - 2002 2003 - 20100

10

20

30

40

50

60

8

47.9

Turkish Privatization Practices in Billion $

Privatization – Catching the Wind

2000 2012

ATU is only 12 years old

Combining expertise of it’s partners - Collaboration between specialized companies: TAV, Unifree, Heinemann

One of Turkey’s most performing successful BOT models

Constant improvement: classic duty free store to a shopping mall concept

BUSINESS MODELAirport + Supplier + Retailer = Customer Satisfaction

Success Formula

Business Model

Efficiency

Partnership IntegrationLevel

Supply Agreement

Retail Service & Supply

Agreement

Concession Contract

Management Contract

Joint Venture Integrated Partnership

Business Model

AirportManaging Partner & Supplier

RetailerCustomer

%50 %50

One of Turkey’s first integrated partnership models

Joint venture

TAV Airports’ expertise in construction Unifree Duty Free’s experience in Turkish Travel Retail marketGebr. Heinemann’s leverage in financial structure and expertise in global travel retail

COLLABORATION

Collaboration

Traditional models: standard rental agreements

Conflict of interest on fixed rent Lack of coordination Inefficiency

vs

Integrated partnership: collaboration on

Rental Fee + Profit Sharing Designing of Airport Guiding Passenger Flow Data Sharing

Collaboration: Key Challanges

OPERATOR MANAGING PARTNER & SUPPLIER RETAILER

Designing and coordinating retail mix: Duty Free, F&B, Lounges, Banks, Other commerical areas

Strenghtening purchasing power Defining categories, brands and product mix

Organizing logistics & Just in time deliveries

Defining + designing retail space

Defining marketing strategy Offering a pleasant shopping environment

Guiding and analyzing traffic evolution and estimation

Creating in-store layouts Ensuring quality standards & Customer satisfaction

Adaptation of offers to the passenger mix and traffic

Revisions and optimizations in airport design and retail space

Coordination in overall marketing strategy

Data sharing for further enhancements in efficiency and performance analysis

Fundamentals of the building

The base for orientation and creating a relaxing environment for the passenger Efficiency and smooth passenger flow Elimination of stress Signage and guidance No competition between operating companies

Interior design - Life span: 3 to 5 years Creating an inviting, comfortable and stimulating environment Clear segmentation of categories Modern designs

Shopping concepts - Life span: Seasonal to 10 Years Create an offer for all customer profiles Maximal seduction and surprise Classic duty free shops + brand stores Combination of local and international brands ‘Story telling’ to enlarge stopping power Integrated and interactive concepts communicated to the customer through technology and

tastings

Airport Design

Airport Design

THE NEXT 25 YEARS: ROOM FOR GROWTH

CONTINUOUS GROWTH DESPITE CRISIS

Economic Crisis – November 2000Economic Crisis – February 2001N.Y World Trade Centre Terrorist Attack - 11.09.2001U.S and U.K launch war against Iraq -19.03.2003Departure Main Shops Expansion- October 2003Suicide bombers attack two synagogues in Istanbul – 15.11.2003. Terrorist attack HSBC Bank in Istanbul – 20.11.2003London hit by terrorist bombings – 07.07.2005Arrival Shops Expansion – October 2006Departure Shops Expansion – December 2006Renovation in Departure Boutiques – March 2008

Turkish Airlines joined Star Allianca – April 2008War between Georgia and Russia – August 2008Economic Crisis – First Quarter of 2009Swine Flu Epidemic – April 2009Sealed bag procedures started – October 2009 Sales limits were decrease in all categories – 07.10.2009Renovation in Arrival Shops – January 2010Increase in Cigarette Prices – 01.01.2010Volcanic eruption in Iceland – 15.04.2010Limits were increased in Arrivals. – 06.09.2010Arab Spring – January 2011Economic Crisis in Europe – January 2011Syria Crisis – April 2012

Source : Ministry of Tourism and Culture - Turkey

Subsidy Amount Given to Local Administrations to Support Tourism

The Next 25 Years: Turkish Economic Outlook

16th largest economy in the world.

6th largest economy compared to EU countries.

Expected to have the fastest growing economy among OECD members between 2011-2017.

GDP tripled between 2002 - 2010 (2002 GDP - $ 231 billion, 2010 GDP - $ 736 billion)

* GDP of a country is the major growth driver of the aviation sector.

Turke

y

Luxe

mburg

Slova

kia

Hungary

South

Korea

Czech Rep

ublic

Australi

a

Mexico

Greece

Norway

Finlan

d

Irelan

d UKSp

ain

Swed

en

Icelan

d

Poland

Switz

erlan

dUSA

OECD

Austria

New Ze

land

Canad

a

Denmark

Netherl

ands

Italy

Belgium

France

German

y

Portuga

lJap

an0

1

2

3

4

5

6

7

Annual Average Real GDP Growth (%) Forecast in OECD Countries 2011 - 2017

The Next 25 Years: Worldwide GDP Growth

Source: Airports Council International

The Next 25 Years: Turkey

Indicates how many times a person flies during a year.

For Turkey, the propensity to fly is 1,4. (102 million/73 million).

In developed countries the average is 3.0

Turkey and other developing countries still possess huge potential for air passenger traffic growth.

Propensity to Fly0

0.5

1

1.5

2

2.5

3

3.5

1.4

3

TurkeyDeveloped Countries

Total Air Passengers

Total PopulationPropensity to Fly =

CONTRIBUTION TO THE ECONOMY

Flow of Foreign

InvestmentMajor source

of income from

privatization

Employee Education

CulturalPromotion

Enhancing Employment

Volume

Contribution to exports

Sustainable Cultural

Development

Corporate Tax

CONTRIBUTION TO ECONOMY