Incheon airport signs $503 mil. Indonesian deal

The Korea Times

The Korea Times

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Tue, September 26, 2023 | 19:25

Foreign Affairs

Incheon airport signs $503 mil. Indonesian deal

Posted : 2021-12-21 16:16

Updated : 2021-12-21 18:24

Incheon International Airport Corp. (IIAC) President Kim Kyung-wook, third from left, poses with Muhammad Rudi, second from left, head of the Batam Indonesia Free Zone Authority, during a signing ceremony between the IIAC and the authority in Batam, Indonesia, Tuesday. Courtesy of Incheon International Airport Corp.

By Kang Seung-woo

The Incheon International Airport Corp. (IIAC) announced, Tuesday, that it reached a 600 billion won ($503 million) deal to develop and operate an airport in Indonesia, according to the nation's main airport operator.

Under the deal, the IIAC will renovate the existing passenger terminal and build a second terminal at Hang Nadim International Airport on Batam Island and run the airport for 25 years until 2047. It is Korea's first overseas airport development and operation deal, it said. Construction is scheduled to begin in June 2022.

Earlier this year, the IIAC, which formed a consortium with Indonesia's state-run airport operator PT Angkasa Pura 1 (AP1) and local construction firm PT Wijaya Karya Tbk (WIKA), was picked as the final bidder for the project after defeating Zurich Airport of Switzerland, EGIS of France and GMR of India.

The signing ceremony with the Batam Indonesia Free Zone Authority was held on the island, attended by IIAC President Kim Kyung-wook, Indonesian Coordinating Minister for Economic Affairs Airlangga Hartarto and other dignitaries.

Batam is the third-most-visited tourist destination in the Southeast Asian country after Bali and Jakarta. In 2019, some 2 million tourists, including 80,000 Koreans, traveled there.

Batam's airport, which has the longest runway in Indonesia, handled 4.54 million passengers and 44,000 tons of cargo in 2019. The IIAC plans to expand the airport to accommodate 25 million passengers by 2040.

According to the IIAC, the consortium is expected to reap 6.4 trillion won during 25 years of operations, with its dividend revenues for the IIAC expected to reach 485.1 billion won.

The project is also expected to pave the way for other relevant local companies to make roads into the Indonesian market.

The IIAC plans to equip the Indonesian airport with its airport common user system (AirCUS), an essential airport operating system used for airline check-in and boarding procedures. In 2011, the IIAC and a Korean small firm jointly developed the system, which has since been used at Incheon International Airport.

The IIAC seeks to help Korean IT companies, duty free shops and travel agencies to do business at the airport, while making efforts to help Korean constructors participate in expanding the terminal and building a second one.

On the back of this project, the IIAC has set its sights on emerging markets such as Southeast Asia and Eastern Europe.

"We plan to expand our overseas business to Southeast Asia, Eastern Europe, the Middle East and Central Asia together through partnerships with Korean companies to contribute to revitalizing the national economy via export of Korea's airport operation platform," the IIAC president said.

The IIAC has signed $227 million worth of deals to operate overseas airports and offer consulting services in 15 countries, it said.

ksw@koreatimes.co.kr