Has Growth Reached Its Limit? Airports Turning Attention to Overseas Business and MRO...

[Asia Economy Reporter Yoo Je-hoon] Domestic airport groups, facing 'growth limits,' are expanding their scope into overseas projects and aircraft maintenance (MRO) businesses. According to industry sources on the 26th, Incheon International Airport Corporation (IIAC) recently agreed to form a consortium with two state-owned enterprises, including Indonesia's first airport corporation (AP1), to enter the Batam Hang Nadim Airport development project in Indonesia, scheduled for the first half of this year.

The total project cost amounts to 6.5 trillion rupiah (approximately 550 billion KRW). This project will cover all areas including airport design, construction, operation, and maintenance for the next 35 years. Seven companies and consortia, including the French comprehensive construction company Vinci, Paris Airports Group (ADP), and India's GMR Group, have passed the pre-qualification (PQ) for bidding in this project.

Last year, Korea Airports Corporation (KAC) won the Peru Chinchero New Airport construction management (PMO) project for the first time among domestic airport companies. KAC has also submitted the final proposal for the operation rights of Manta Airport in Ecuador. Once the final contract is completed, KAC will be able to operate Manta Airport for 30 years.

The reason airport companies are knocking on the door of overseas projects one after another is attributed to the growth limits of the domestic passenger dispatch market. According to the Ministry of Land, Infrastructure and Transport's Aviation Information Portal System, the number of domestic passengers (paid and transfer passengers) at domestic airports last year was 90.38 million, an increase of only 5.2% compared to the previous year. Considering that the average annual growth rate was over 10% from 2016 to 2018, the growth trend has clearly slowed down.

An industry insider said, "The proportion of outbound travelers relative to the population has reached its limit, and recently, the expansion of long-haul direct routes by competing countries such as China has made the growth limit more apparent," adding, "It is a natural phenomenon to turn attention to overseas projects."

Recently, airport companies have also been eyeing the MRO business. Incheon Airport Corporation is currently undertaking a project to create a 16 million square meter MRO cluster on the northwest side of Incheon Airport's 4th runway and north of the maintenance hangar.

Typically, aircraft maintenance (MRO) business is classified into four units: ▲line maintenance ▲airframe maintenance ▲engine heavy maintenance ▲component maintenance. Industry experts evaluate that focusing on engine and component maintenance, which require high technical levels such as licenses, and airframe modification can secure a competitive edge against overseas MRO complexes.

A representative from a domestic airline said, "In the case of line and airframe maintenance, since it is a labor-intensive business, the advantage is less compared to countries with lower labor costs. However, in engine and component maintenance, if a cooperative system is established with private operators possessing technology and licenses, it is expected to generate sufficient synergy effects."

This content was produced with the assistance of AI translation services.