Hong Kong International Airport’s billion dollar baby

HONG KONG. Capacity-constrained Hong Kong International Airport (HKIA) managed to squeeze out an extra +1.4% revenue from retail licences and advertising in FY2017-18 (12 months to March this year) to reach HK$7,909 million (US$1,020 billion). This was mainly on the back of passenger growth of +4.5% to 73.6 million.

But – as HKIA celebrates its 20th anniversary – Airport Authority Hong Kong (AAHK), warned that “passenger and cargo traffic will grow moderately until the commissioning of the three-runway system (3RS)”.

Construction of the 3RS kicked off in August 2016 and the project’s reclamation works are now at their peak according to AAHK, which is responsible for HKIA’s operation and development.

While the huge project takes shape over the coming years – and in light of growing traffic demand – “we will carry out a series of enhancement projects to ensure the airport has sufficient capacity and maintains high service standards before the 3RS enters service”, noted AAHK.

Retail and F&B focus

Retail licences and advertising represented the biggest slice of total revenue in FY2017-18 at 36%. AAHK is keenly focused on this segment and has been developing and modernising it at a rapid rate.

In July 2017, the pre-order online platform HKairport Shop was launched allowing passengers to order items and pick them up at the hub. They can choose from 1,500 products, including packaged food, beauty and skincare, wine and electronics. Goods can be collected at the airport as soon as three hours after purchase or delivered to addresses in Hong Kong.

During the year, HKIA also welcomed major new concessionaires to the airport. For example Shilla Duty Free officially inaugurated its Beauty&You stores at the end of June; while Lagardère Travel Retail and China Duty Free Group’s joint venture Duty Zero by CDF will officially unveil its full complement of liquor and tobacco stores this week.

AAHK said: “The new anchor outlets offer an engaging customer experience, with ‘magic mirrors’ for virtual make-up, a ‘new generation’ zone featuring emerging Japanese and Korean beauty brands, a whisky tasting bar, and an in-store VIP lounge. We also broadened HKIA’s retail mix with children’s wear, entertainment and lifestyle products.”

The airport’s free delivery service has now grown to 15 markets, including long-haul destinations such as Australia, Canada and the US.

In October 2017, advance works began for the renovation of the East Hall food court, which will become a 24-hour gourmet hub with 300 additional seats and nine new food kiosks. The airport has also widened the culinary mix by introducing hybrid shops that combine retail and food & beverage outlets.

Terminal 1 expansion

Meanwhile, Terminal 1 (T1) is being expanded to increase capacity before the completion of the 3RS. During the year, advance works for construction of the T1 Annex Building and a car park extension were completed.

When this project is finished, T1 will have new shops and F&B outlets added to the landside arrivals hall. Some 48 new check-in counters with self-bag drop facilities and two additional baggage reclaim carousels will also be installed.

The terminal’s East Hall restricted area will be enlarged to provide more recreational facilities, including a two-storey children’s play area and a dedicated zone featuring new technologies for travellers. Passengers will be able to relax in a new outdoor garden.

A 200-metre air-conditioned walkway between T1 and the North Satellite Concourse, known as the Sky Bridge, is being built featuring an observation deck and F&B outlets. The 28-metre-tall Sky Bridge is slated to open in 2020.

“More fresh concepts and pop-up stores will soon be introduced. With these changes – and our HKairport Shop online platform – we are redefining airport shopping,” said AAHK Chief Executive Officer Fred Lam.

Original source - The Moodie Davitt Report

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