The Hong Kong Airport Authority (AAHK) has reported that retail licences and advertising revenue, representing 36.7% of total revenue, fell 9.6%, to HK$7,149m ($911m) during fiscal 2018 (ended 31 March 2019), which it attributes to the full-year effect of the new anchor and money exchange licences awarded in the second half of 2017/18.

 

Despite higher passenger numbers and flight movements, AAHK’s total revenue fell 11.5%, to HK$19,470m, largely as a result of a one-off gain from the sublease of land at HKIA for SKYCITY’s hotel development in 2017/18 and lower revenue from retail licences and airside support services franchises in 2018/19.

 

As reported last month, the airport authority described 2018 as a ‘transitional year’ with the main highlight being the successful changeover of its anchor licenses including Duty Zero by cdf (liquor and tobacco) and Beauty & You (perfumes and cosmetics) at Hong Kong International Airport (HKIA).

 

Revenue from retail licences and advertising dropped to HK$3,567m ($455m) in the six-month period ending September 2018. This amounted to HK$4,202m during the same period last year.

 

GROWTH IN AIRPORT LOUNGE REVENUE

“The major revenue categories were airport and security charges; revenues from airside support services franchises, retail licences and advertising; other terminal commercial revenue; and other income, which collectively comprised 96.6% of total revenue,” says AAHK of fiscal 2018.

Airport and security charges, representing 36.1% of total revenue, rose 5.7%, to HK$7,024m, primarily due to growth in flight movements and passenger traffic, and increases in landing and security charges, which took effect on 1 September 2018 and 1 October 2018, respectively.

 

Revenues from airside support services franchises dropped 8.8%, to HK$2,786m, mainly due to the expiry of the aviation fuel system facility payment in July 2018.

 

This was partly offset by higher franchise fees from air cargo and ramp handling due to improved terms when contracts were renewed during the year; amortisation of upfront payments for the premium logistics centre; and higher ground handling service and cargo revenues at Zhuhai Airport that accompanied increases in flight movements and cargo throughput.

 

Other terminal commercial revenue mainly represents income from leasing offices and airport lounges to airlines and other tenants.

 

This category grew 4.0%, to HK$1,460m, largely due to the revised licence fee structure for commercial pay-in lounges. Other income dropped 83.1%, to HK$394m.

 

This decrease was attributable to a one-off gain in 2017/18 of HK$2,185m from the sublease of land at HKIA to Regal Hotels Group for the development and management of the SKYCITY hotel.