Asian airports discuss commercial revenue strategies

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Gavin Lipsith

12-May-2008

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A fascinating workshop at TFWA’s Gate One2One conference in Singapore gave delegates an insight into the models employed by some of the region’s biggest airports

Singapore Changi, Sydney International, Beijing Capital International, Seoul Incheon and Cochin International airports provided an insight into their commercial strategies in an afternoon workshop at TFWA’s Gate One2One conference today (May 12). Entitled “Airport revenue strategies…balancing aeronautical and commercial activities”, the session examined how the airports strive to increase non-aeronautical contribution to revenues in light of increasing demands from airlines to reduce aviation charges.

Civil Aviation Authority of Singapore commercial director Lim Peck Hoon used Changi’s new terminal three and its renovation of T2 in 2004 to exemplify the point, arguing that an over-emphasis on aviation-based commercial revenues such as ground handling and land leasing to airlines could lead to a strain on the airport’s relationship with airlines. However, she added that airports can become too commercial, with warning signs including compromises on security and safety, forcing passengers to walk long distances and a lack of free seating.

Incheon International Airport Corp director of retail marketing group Kwang Soo Lee talked about the group’s two-year effort to increase and maximise its commercial revenue, which is culminating in the opening of the new concourse A and the unveiling of a new airport and retail branding, Airstar. The airport achieved duty-free sales of over $1bn last year, and the new concourse, taking total retail space to 35,000sq m (376,600sq ft) divided into 300 shops, will help in its goal of reaching total commercial revenues of $350m.

Macquarie Airports associate director Doug Benham used examples from the group’s airports in Sydney, Brussels, Bristol and Copenhagen to make his point that creativity in commercial thinking and a research-driven focus on customer needs are essential. His presentation featured car parking initiatives at Bristol and land usage at Brussels as well as retail developments at Copenhagen and Sydney to reinforce the message.

Cochin International Airport Ltd managing director Babu Rajeev gave details about the steps the airport is taking towards the ambitious goal of being a “landing charge-free” facility, based on a focus on commercial operations driven by a mix of joint ventures and self-operated concerns. At present commercial revenues account for 58% of the total figure, with its duty-free joint venture with Alpha Asia contributing 30% of total revenue. Rajeev said he aimed to grow duty-free’s share to 40%.

Beijing Capital International airport marketing manager Yiming Li revealed that the airport does not seek to maximise profit, but aims to generate enough revenue to continuously support the development of the airport. He used the new T3 and the remodelling of T2 to make his point that flexibility, compatibility of commercial and aviation operations and the assessment of opportunities are key aspects of balancing commercial revenues and aeronautical activities.

A more detailed report of the session will appear in a forthcoming issue of DFNI.

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Asian airports discuss commercial revenue strategies

Gavin Lipsith

A fascinating workshop at TFWA’s Gate One2One conference in Singapore gave delegates an insight into the models employed by some of the region’s biggest airports

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