HONG KONG. Despite higher passenger numbers and flight movements, key commercial revenue segments fell at Hong Kong International Airport (HKIA) in its financial year ending March 2019.
While traffic grew modestly by +2% to 75.1 million passengers during the period, retail licences and advertising income – which represent 36.7% of total revenue – declined by -9.6%, to HK$7,149 million (US$912 million), taking the airport below the US$1 billion mark it achieved in the previous financial year.
Airport Authority Hong Kong, which runs HKIA, said: “This decrease was mainly a result of the full-year effect of the new anchor and money exchange licences awarded in the second half of 2017/18.”
On the retail side, new anchors included The Shilla Duty Free whose Beauty&You stores celebrated their first anniversary last month; China Duty Free Group and Lagardère Travel Retail’s joint venture liquor, tobacco and gourmet business Duty Zero by cdf; and Heinemann’s Sweet Dreams confectionery concept.
Total revenue at HKIA fell by -11.5% to HK$19,470 million (US$2,484 million) which was also affected by comparison with a one-off gain from a sub-lease of land to Regal Hotels Group for the airport’s SkyCity hotel development in FY18, plus lower revenue (-8.8%) from airside support services franchises in FY19.
Other terminal commercial revenue – mainly income from leasing offices and airport lounges to airlines and other tenants – grew +4.0% to HK$1,460 million (US$186.2 million), largely due to a revised licence fee structure for commercial pay-in lounges.
“Dining and shopping are… a focus for enhancement”
Commenting on passenger services, AAHK CEO Fred Lam said: “This year, we completed phase one of the East Hall food court revamp, introducing branches of three Michelin-recommended brands (Tasty Congee & Noodle Wantun Shop, Putien, and Moon Thai Express). Phase two of the refurbishment started during the year and will be completed by the third quarter of 2019.”
AAHK recognises the key role of its commercial business. It stated: “Dining and shopping are keys to passenger satisfaction and a focus for enhancement. Renovations on the south side of the food court started in February 2019 and will be completed in the third quarter when four new food kiosks will open. The project increases the food court’s seating capacity from 900 to 1,200.
“Our airport shopping ambassadors programme, launched in October 2018, helps passengers make faster, better-informed decisions by proactively offering information about the airport’s retail and dining outlets – and the latest promotions. In its first six months, around 170,000 passengers used this popular service.”
In December, HKIA introduced an electronic version of the ambassadors programme. It allows passengers to send enquiries via www.hongkongairport.com for shopping and dining information, as well as itinerary suggestions before getting to the airport. In the same month, HKIA launched an enewsletter to keeps passengers abreast of new shops and services at the hub.
AAHK said: “We continue to diversify our retail mix, introducing new categories such as athleisure wear and kids entertainment. Product variety on the online platform HKairport Shop – where passengers order goods and pick them up at HKIA – expanded with the addition of lifestyle and travel gadgets, fashion accessories and watches.” HKairport Shop now offers more than 3,500 items.
City airport to airport city
Looking ahead, HKIA remains focused on the SkyCity project. In May last year, AAHK awarded the contract to develop and manage the 350,000sq m integrated commercial elements of the project.
AAHK said: “Our growing transport network, together with new commercial facilities around HKIA, is fuelling our transformation from a city airport into an airport city. The SkyCity development – which comprises hotels as well as retail, dining and entertainment facilities – is scheduled to open in phases between 2020 and 2027. In addition, a premium logistics centre will open in 2023, helping us capture opportunities from cross-boundary ecommerce and related logistics businesses.”
Over the same time period, the three-runway (3RS) infrastructure programme, now underway, will increase HKIA’s long-term capacity. With completion planned for the end of 2024, the 3RS involves the construction of a third runway, supporting taxiways, and a Third Runway Passenger Building and associated infrastructure. Terminal 2 will also be expanded to provide a full suite of passenger services.
