Hainan Meilan reports strong commercial growth

Gavin Lipsith

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The airport’s decision to outsource its domestic retail operation to DFS Group is paying dividends

Hainan Meilan International airport has reported a 19.8% increase in non-aeronautical revenues for 2006, driven by passenger growth and increased rental revenues after outsourcing its catering and domestic retail operations in 2005.

DFS Group was awarded the 10-year contract to operate domestic retail at Hainan Meilan from April 2005 after the airport decided to switch from operating the business itself. SSP was awarded the catering contract, while the airport opted to continue to run international duty-free retail itself.

Non-aeronautical revenue reached Rmb103.6m ($13.4m) for the year. Income from directly operated retail decreased by 6.4% to Rmb9.5m ($1.23m) while franchise (concession) income grew by 73.8% to Rmb27.8m ($3.6m) compared with the previous year.

In its annual statement, Hainan Meilan Airport Co said: “The transformation of the group from self-operation to franchise operation has put into place unified and professional commercial management. Through entering into a contract with minimum-guaranteed rent, the group was assured of fixed revenue in times of falling turnover while obtaining pro rata additional revenue in times of growing turnover.”

The airport reported total revenues of Rmb334.4m ($43.3), a marginal decrease compared with the same period in 2005.