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Incheon Airport May Build Terminal for Budget Travelers

Incheon Airport, South Korea’s busiest, is considering building a dedicated terminal for low- cost carriers after budget passenger numbers surged sevenfold in three years.

Management will decide by year-end at the earliest whether to build the facility or to convert an existing concourse to budget operations, Lee Chae Wook, chief executive officer of operator Incheon International Airport Corp., said in an interview in Hong Kong yesterday.

“We’ve reached a point where we need to consider a way to better serve travelers and budget airlines,” he said. “The number of passengers has increased at a very rapid pace in a very short time.”

Osaka’s Kansai airport and Kuala Lumpur have already built budget terminals, and Tokyo Narita plans to add one, as the growth of low-cost airlines such as AirAsia Bhd. (AIRA) spurs passenger numbers. The number of budget travelers at Incheon, 50 kilometers (31 miles) west of Seoul, will probably reach 3 million this year, from about 400,000 in 2009, Lee said.

About 12 budget carriers offer flights to the airport, including AirAsia X and Peach Aviation Ltd. Their passengers will account for about 8 percent of the 39 million travelers expected to use the facility this year, Lee said.

Second Terminal

Incheon is already working on plans to open a second terminal by 2017, which will boost capacity to more than 60 million passengers a year. A budget terminal would be in addition to this, Lee said. The airport may hit its current designed capacity by as early as 2016, he said.

The airport operator also intends to build a casino, hotels, convention center and a shopping mall on land near the airport by March 2016 to attract more travelers, Lee said. The development is being undertaken with a venture between Paradise Group and Sega Sammy Holdings Inc. (6460)

The company generates about 65 percent of sales from shops, hotels and other businesses not directly related to flying. Incheon surpassed Dubai and London Heathrow to become the world’s biggest airport in terms of duty-free sales last year, helped by rising numbers of Chinese visitors and the opening of LVMH Moet Hennessy Louis Vuitton SA (MC)’s first airport outlet worldwide.

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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