With more than 70 per cent of Chinese airports losing money, the authorities have decided to slash retail prices at airports of cosmetics, clothes and food.
“We have lost an opportunity worth billions of yuan,” said the director of the General Administration of Civil Aviation’s policy research department, Liu Shaocheng.
“Retail and other non aviation sales have grown at about a quarter the pace of traffic at Chinese airports, as passengers shun $10 cups of coffee and goods costing twice as much as in downtown stores. Airports in the second largest aviation market in the world earn less than 40 per cent of revenue from such businesses, compared with 60 per cent in Singapore and Frankfurt,” the regulator said, reported Bloomberg.
“People have got used to the idea that sold in airport means expensive,” said Li Jun, an aviation analyst at Everbright Securities in Shanghai, who seldom eats or buys anything at airports. “But, the opportunity is there, especially for the hubs like Beijing and Shanghai.”
Beijing Capital International Airport, the busiest in the nation, more than doubled retail sales last month after cutting prices as much as 21 percent, according to Qian Liqin, the chairman of Capital Airport Commercial & Trading. The airport will continue to lower retail prices, he said.
All Chinese airports are expected to cut the price of food and consumer goods to about the same level as in downtown shops, Liu said.
Airports in China generated three billion yuan in retail sales last year, the regulator said which was less than two per cent of the $24 billion global tally. China accounts for more than 10 per cent of worldwide airline passengers.
Chinese airport operators, which generally run their own outlets, may also lease out shops to specialized retailers and duty free operators, Liu said.
