Incheon International Airport Corporation Consultancy Division

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Written by David Hayes
Monday, 10 June 2013 12:17

Incheon International Airport Corporation Consultancy Division is busily transforming airport commercial practice in one of Asia’s fastest growing and dynamic economies ­ –Indonesia – as David Hayes discovered recently.

 

Juanda International Airport serving Indonesia’s second largest city of Surabaya in East Java, is preparing a major upgrade and expansion of its duty free departure and other retail facilities for the planned opening of the airport’s new Terminal 2 in November of this year.

 

The near complete facility will more than double Surabaya Airport’s total combined annual international and domestic passenger capacity to 14m and allow the airport authority to develop duty free and other retail facilities to become some of the largest in eastern Indonesia.

 

Indonesia’s state-owned civil airports company PT Angkasa Pura Satu covering eastern Indonesia has contracted South Korea’s IIAC Corporation Consultancy Division to prepare this duty free and commercial facilities plan.

 

“There will be a tender for the duty free concession operator as soon as SAMS management team finish their commercial services plan around mid-year.” - Sang J. Ahn, Director of Incheon International Airport Corporation’s Consulting Team.

 

This covers the redevelopment and upgrading of retail facilities and F&B outlets in the existing Terminal 1 and the installation of new duty free, other retail and F&B facilities for the new T2 opening this November.

 

“We have completed a commercial plan for both T1 and T2 as this is more efficient,” said Sang J. Ahn, Director of Incheon International Airport Corporation’s Consulting Team.

 

“The basic target is to maximise the commercial sustainability by operating both terminals and the second target is that the overall commercial space should occupy about 10% of Juanda Airport’s total terminal space.

 

[Left: An artist’s impression of the new Juanda International Airport T2 where duty free faclities will be tendered shortly.]

 

"Some 15,000sq m of commercial space is planned both airside and landside in the two terminals in future, based on the two terminals’ combined 110,000sq m floor area.”

 

Juanda Airport T1 was originally designed to handle 8m domestic and international passengers and totals around 60,000sq m in area. It is now set to have about 9,000sq m of commercial space in future.

 

By contrast, T2 totals around 50,000sq m in area and is expected to have around 6,000sq m of commercial space when it is fully built out.

 

T1 currently handles domestic and international flights, although all services operated by national carrier Garuda Airlines are now expected to transfer to T2 after the opening, with T1 eventually set to become a domestic facility only.

 

The T2 plans will see five duty free and tax free shops established, covering about 930sq m and two luxury branded boutique facilities, along with other commercial facilities including shops and F&B outlets.

 

“Duty free facilities will be under 1,000sq m in area at first as international passenger numbers are less than 10% of total passengers. Also, duty free shopping is not developed at present, so our target is to attract people to the terminal,” Ahn remarked.

 

“We have proposed to have one operator for the duty free shops; also, there will be two premium brand boutiques, each about 50sq m in area. They will be located in the same area as the duty free shops.”

 

[Left: An artist’s drawing of the new $170m passenger terminal at Sultan Aji Muhamad Sulaiman (SAMS) International Airport (formerly Sepinggan Airport) in Balikpapan, East Kalimantan.]

 

 

Overall retail facilities (including duty free shops, tax free outlets and luxury boutiques) will occupy 4,868sq m at Juanda Airport after T2 opens and T1’s facilities are upgraded. In addition, F&B outlets will cover 6,750sq m at different airside and landside locations around the airport.

 

The five duty free and tax free shops and the two boutiques are expected to be tendered as a single concession package.

 

“In future there will be some flexibility for more space to be used for duty free shops in Juanda Airport,” Ahn noted. “There are two reserved areas for more shops. Each area covers 150sq m, so duty free shopping can be expanded in future.”

 

Tendering for the T2 duty free operator is expected to begin mid-year and will be carried out by PT Angkasa Pura Satu, assisted by the Incheon Airport Consulting Team.

 

“We will support them in our role as commercial development advisor,” Ahn said. “We hope to open the tender to international bidding though there may be some portions for local bidders. Preparation of the tender packages is starting in May.”

 

“Indonesia is growing, but airport revenues are not big as the airports are not ready to provide a commercial environment and passengers do not realise that airports can be a shopping location as none has done this so far. We have to overcome this working with PT Angkasa Pura Satu.” - Sang J. Ahn, Incheon International Airport Corporation Consulting Team.

 

Served by more than 20 airlines, Juanda Airport handles about 16m passengers a year of which 10% or 1.6m are international. Currently, services are operated to about 10 foreign destinations, including Singapore, Hong Kong, Taipei, Kuala Lumpur, Johor Bahru, Penang, Bangkok and Bandar Seri Begawan.

 

Prospects for the development of duty free sales at Juanda are very bright as a large number of international passengers use the airport for regional flight connections for business due to the fast expanding industrial base in the Surabaya region and East java.

 

[Left: Sang J. Ahn, Director of Incheon International Airport Corp’s Consulting Team, with Ms Ji Sook Kim, Manager, Concession Planning, Incheon International Airport.]

 

The three-year cooperation agreement between the IIAC Consultancy Division and the airport authority commenced in April 2012 and Ahn believes there is still a lot of advice that the consultancy can offer in future, as he explained.

 

“Indonesia is growing, but airport revenues are not big as the airports are not ready to provide a commercial environment and passengers do not realise that airports can be a shopping location as none has done this so far. We have to overcome this working with PT Angkasa Pura Satu.”

 

As part of this cooperation agreement the Consultancy Division recently helped the management team at Sultan Aji Muhamad Sulaiman (SAMS) International Airport (formerly Sepinggan Airport) in Balikpapan, East Kalimantan.

 

The project here involved reviewing the commercial services development plan for the airport’s US$170m new passenger terminal on which construction work is due for completion in September this year.

 

“The new passenger terminal is almost finished. It is very spacious and beautiful,” Ahn commented. “The existing terminal is old and small, and serves domestic and international passengers.”

 

“We have proposed to have one operator for the duty free shops; also, there will be two premium brand boutiques, each about 50sq m in area. They will be located in the same area as the duty free shops.” - Sang J. Ahn, Incheon International Airport Corporation Consulting Team.

 

Served by 15 airlines, most international flights from Balikpapan are to Singapore and Kuala Lumpur. “There is a small duty free shop now in SAMS airport. With the new terminal opening there will be more duty free shops as it is a business traveller airport,” said Ahn.

 

SAMS airport handled 6.6m passengers in 2012, of which 98.4% took domestic flights and 1.6%, equivalent to 105,000 passengers, used international flight services.

 

Following completion of the new terminal, Balikpapan airport’s capacity will increase from 1.9m to 15m passengers a year.

 

“We revised the Balikpapan Airport commercial plan in late February,” Ahn said.

 

[Left: Balikpapan Airport's existing departure terminal.]

 

Commercial service facilities including duty free and tax free shops will cover more than 10,000sq m of floor space in the new SAMS terminal.

 

“There will be a tender for the duty free concession operator as soon as SAMS management team finish their commercial services plan around mid-year,” said Ahn. “There is space for luxury brand boutiques and duty free shops, but the duty free retail concession package has not been decided yet.”

 

Elsewhere in Indonesia, IIAC Consultancy Division is also negotiating a new airport commercial services review and design contract with PT Angkasa Pura Dua, Indonesia’s state-owned civil airports company that is responsible for airports in western Indonesia.

 

This will cover the design of duty free shops and other commercial services for Kuala Namu International Airport which is due to open shortly serving Medan, the capital of northern Sumatra and replacing the existing Polonia International Airport.

 

[Below: Kualanamu International Airport - due to open shortly]

 

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