NEWS/ANALYSIS Incheon LCC terminal ‘still an option’, says IIAC Unlock the full potential...
Incheon International Airport Corporation (IIAC) has revealed it is honing in on low-cost carriers to optimise operational and commercial efficiencies for the future. Luke Barras-Hill speaks to Executive Director of Concessions Development Group Chang-Kyu Kim.
T
he globe’s most lucrative airport hub for DF&TR sales would be forgiven of
late for relegating any strategy designed to harness increasing low- cost passenger volumes down the priority list. Despite a volatile 12 months for
South Korea’s travel retail market, which resulted in Lotte Duty Free pulling its non-liquor & tobacco contracts at Terminal 1 due to the residual impact of THAAD and concession fee pressures, the airport still managed to rack up $2.1bn in DF&TR sales last year. January’s Terminal 2 opening came
at the right time, raising the airport’s capacity by 18m and providing crucial infrastructure for an airport that hit 62.2m pax in 2017. At that time, rent reduction
negotiations with incumbent operators including Shilla and Lotte were designed to mitigate perceived falls in spend per pax owing to the shift of Korean Air, Air France KLM and Delta Air Lines to the new Terminal 2, while Asiana and China Southern remained at Terminal 1. As reported earlier this year,
TRBusiness revealed Chang-Kyu Kim’s appointment as the new Executive Director of Concessions Development Group following the secondment of Deputy Executive Director of Concessions Marketing Group Bum-ho Kim to IIAC’s academy training division for a one- year period.
and as a long term goal, IIAC is considering a low-cost terminal as one possible option,” he says. “For now, Incheon Airport duty
free locates last-minute shops near gates assigned to LCCs. Product categories served in last-minute shops are designed to suit [the] characteristics of LCC customers (nationality, age and average spending) to maximise customer satisfaction and duty free sales.”
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‘Effective operational tactics’ LCCs accounted for 27% of the Asia hub’s total aviation traffic last year, according to Chang-Kyu Kim, presenting a sizeable opportunity to capitalise commercially. “Considering LCC’s potential
growth, Incheon Airport is planning on developing more effective operational tactics aimed at LCCs,
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IIAC targets 130m by 2020 A specific LCC terminal – something that has been the subject of speculation for a while – would certainly offer an attractive proposition given the increasing liberalisation of the air transport market in Asia. “If the remaining year maintains
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passenger growth [at the] rate observed year-to-date, Incheon would record passenger traffic of 68m,” reveals Kim. “The capacity aim is to process passenger traffic of 130m by 2030.” As highlighted, Incheon retained
first place in the TRBusiness Top 10 DF&TR Airports sales rankings, with a rise of +4.1% to $2.1bn in 2017 – an admirable showing given the volatile impact of declining Chinese
Extracts from this article first appeared in a comprehensive interview with Incheon International Airport in the TRBusiness Top 10 Airports edition in August.
“Considering LCC’s potential growth, Incheon Airport is planning on developing more effective operational tactics aimed at LCCs, and as a long term goal, IIAC is considering a low-cost terminal as one possible option.”
Chang-Kyu Kim, Executive Director of Concessions Development Group, IIAC
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a hopeful signal, showing robust increase over the previous year, for the first half of this year (Jan-June).” «
passenger numbers linked to THAAD [although the year-to-date results indicate a revival in growth – Ed]. Broken down in terms of sales by
nationality in the first half of this year, Korean passengers took the greatest share (48%) followed by Chinese (36%) and Japanese (3%). “Signs show that duty free sales
this year are expected to grow continuously,” comments Kim. “[The] sales figure this year gives
Above: Incheon Airport positions last- minute shops close to gates assigned to LCCs.
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