Xi’an Xianyang International Airport (XIY) has revealed details of an RMB46.6bn ($6.5bn) investment project which will provide an additional 60,000sq m of commercial space.

The extra space will be located in the new 700,000sq m Terminal 5 which is due to open in 2023/2024. The new facility is part of the third phase of expansion at XIY, which has been approved by the Shaanxi Provincial government.

Other elements of the revamp include three additional runways, a 350,000sq m Ground Transportation Centre, integrated Metro Station and decentralised security area. Capacity will be between 80 million and 100 million passengers once the project is complete.

THIRD EXPANSION PHASE

TRBusiness has learned that the main commercial objectives of the third expansion phase are to find optimum locations within the terminals for featured products and services, provide a platform for advanced technology and creative products and to establish emotional connections with consumers.

Currently, XIY, the joint-venture between German company Fraport (24.5%), China Airport Investment Co Ltd (24.5%), China West Airport Group (50%) and Air Logistic (Xian) Co Ltd (0.1%), operates 27,000sq m of commercial space. It has more than 60 commercial tenants and 200 brands.

Food and beverage accounts for 42% of commercial space, with the remainder comprising convenience and local souvenir stores (14%), fashion (15%), consumer electronics (7%), gifts and toy shops (4%), accessories (3%), leather goods and luggage (2%), functional services (6%), books (2%) and perfumes and cosmetics (5%).

Terminal 2, which has been operational since 2003, has a total built-up area of 100,000sq m, with 10,000sq m of commercial space featuring multiple brands. Terminal 3 was inaugurated in 2012 and includes a fashion square and central commercial area. This is spread over 17,000sq m of commercial space (landside and airside).

Heinz Gabel, Deputy General Manager and COO/CCO, Xi’an Xianyang International Airport told TRBusiness: “Given the status of the design and planning, the tender process for commercial opportunities in the new terminal has not yet been decided. Depending on the progress of the project, I expect this to start around spring 2022.”

In terms of duty free and travel retail performance in 2018/2019, Gabel is ‘quite happy’ with development. “While our overall passenger figures havre grown from 41.857 million in 2017 to 44.708 million in 2018 (6.8%), we are expecting 47.937 million passengers in 2019, an increase of 7.2% on last year.

“Retail revenue grew 8.9% in 2018, once again outperforming passenger growth and is expected to increase 8.3% in 2019. This means average spend per passenger at the airport is increasing.”

RETAIL EVOLUTION

Since opening the first walkthrough duty free shop in China in May 2015 — the store is operated by China Duty Free Group —XIY has experienced a significant increase in shops and brands. “The offer is more diversified. We also observe a slow increase in luxury brands versus ‘budget’ brands, particularly in regard to fashion, cosmetics and accessories.”

Like in most Chinese airports, the majority of traffic at XIY is domestic. International traffic, however, is growing steadily, growing from 6.8% in 2018 to almost 7.5% in 2019. “We expect that trend to continue and by 2023/2024, when the new terminal is operational, the share of international passengers will reach anything between 12% and 15% of the total.

“The retail offer is set to reflect this change with the introduction of more international and luxury brands.”

Regarding the company’s relationship with retailers and ability to ensure the best possible customer experience, Gabel commented: “Our commercial department maintains constant communication with our commercial tenants in order to obtain their feedback and opinions on developments in the market, catch trends and understand customer expectations.

“We also upgrade the design of our commercial areas to provide a contemporary look and feel and create a modern, relaxed and pleasant atmosphere for passengers to enjoy time at the airport. We expect retailers to upgrade their premises accordingly.”