The New Inchon Invasion Will Be by Air
INCHON, South Korea
Inchon is famous as the site of Gen. Douglas MacArthur’s 1950 landing, a daring move that turned the tide in the Korean War. These days, however, Lim Tong Myung and his colleagues are more worried about 1994, 1995 and 1998.
Those years saw the much-publicized opening of giant new airports in Osaka, Japan; Denver; and Hong Kong. In each case, major snafus--runways sinking, baggage carousels run amok, cargo mis-routed--quickly followed the ribbon cutting.
The developers of Inchon International Airport are spending freely and going to extraordinary lengths to avoid the same fate as it approaches its March 29 debut.
“We’ve tried to learn from other airports’ mistakes,” said Lim, director of external affairs for the new airport. “These three have been good teachers of what not to do.”
The effort will be worth it in South Korea’s eyes if its bold bid to become the premier aviation gateway to China and north Asia is realized.
In the near term, analysts are skeptical that Inchon airport will provide the economic fuel required to reverse the nation’s recent corporate and consumer spending slide. “One airport is not going to counter the sharp slowdown in exports or the continued slip in corporate demand,” said Sun Bae Kim of Goldman, Sachs & Co. “It’s no magic bullet.”
Longer term, however, analysts say Inchon represents a huge engine of direct and indirect economic growth that promises some major dividends to South Korea.
Inchon’s cargo capacity in the first year could vault it to No. 6 in the world, ahead of Seoul’s Kimpo International Airport and in the same league as Los Angeles International Airport. Passenger capacity will grow from 27 million to 100 million by 2020, greater than any airport’s current load.
That could turn out to be pie in the sky, of course. Already, chances for a perfect takeoff are remote, airline operators say. The $5-billion project is in financial trouble, the fees and other costs of using Inchon are sky-high, the baggage-handling system is causing worries, and the tolls on the only road to the airport are just short of highway robbery.
Industry experts say it will take more than Inchon’s fancy bells and whistles to become a regional hub. Although Asia is the world’s fastest-growing airline market, there’s been a rash of new airports built in recent years, including Japan’s Kansai International Airport near Osaka and Chitose Airport on the northern island of Hokkaido and those in Shanghai, Beijing, Hong Kong and Kuala Lumpur, Malaysia. None of those airports has fully realized its goal of becoming a major airline hub.
But Inchon has a lot going for it: The site is well-situated on major Asian trade lanes; its distance from residential communities allows it to operate around the clock, whereas its competitors in the region have late-night restrictions; and it has enough land nearby to allow it to quadruple its capacity by 2020.
Competitors are concerned. Narita International Airport, outside Tokyo, is bracing for stiffer competition, and Kansai projects that Inchon and other nearby airports could cost it as many as 2,000 flights a year. To Los Angeles alone, for example, 38 flights will depart from Inchon weekly.
Even as Inchon looks to steal a march from Japan, its greatest opportunity may be in the opposite direction. With China set to liberalize tourism and join the World Trade Organization, Inchon finds itself within four hours’ flying time of 26 Chinese cities with populations of more than 1 million. Though Japanese tourists using Kimpo International now outrank Chinese 5 to 1, that ratio is expected to be reversed in coming years.
“Korea is in a good position. It’s on the great circle route,” said Manfred Momberger, editor of an airport industry newsletter. “But it has a big job ahead convincing everyone.”
Inchon is trying to woo airlines with efficient, reasonable service and ultramodern features, including computerized tarmac lighting that quickly guides aircraft from runways to arrival gates.
And it’s luring passengers with nap rooms, showers, video rooms, fashion boutiques, conference centers and e-mail terminals. The place has a spa and fitness center and will soon have an adjacent golf course and theme park.
The impressive steel-and-glass terminal has plenty of natural light and gives the impression the traveler is inside the skeleton of a giant sea mammal. The materials are softened here and there by wooden floors, plants and waterfalls “to relieve passenger stress,” said Yuh Tae Soo, the airport’s marketing manager.
One problem will be to change travelers’ behavior, no matter how much geographical sense it makes. It’s two hours shorter to fly from Sydney, Australia, to London via Inchon than via Singapore, but most people don’t think about the Earth’s bulge when making reservations.
Another question is whether Beijing will cede a hub or two to its neighbors or try to keep the business to itself, as many analysts believe. That said, the number of potential travelers from China is enormous, and it may have little choice but to share the wealth. A fraction of 1% of Chinese now travel by air, contrasted with 38% of Americans.
“If the Chinese percentage went up to 1%, it would ruin the whole global aviation market,” Momberger said. “There wouldn’t be enough capacity worldwide.”
That kind of promise helps explain the lure of new airports, although given their recent track record, it’s fair to ask why any city would want one.
Since 1994, Kansai International has been sinking physically and financially: The man-made island it sits on has settled 37 feet in five years--the depth planners projected it would sink in 50 years--and last year it lost $1.3 billion. Denver International became a laughingstock when out-of-control baggage-handling equipment started launching suitcases skyward. And Hong Kong’s new Chek Lap Kok saw its air cargo operation snarled for months by inadequate training, personality clashes, bad management and an overly ambitious starting date.
To avoid a similar public relations disaster, Inchon has delayed its opening several times, checked and double-checked its systems, set aside nine months for testing and recruited “real people” to walk the terminals looking for problems. Airport director Kang Dong Suk even lived with his family in a bungalow at the airport site for three years to keep a close eye on construction.
While airport officials insist the immediate problems are inevitable teething pains, they do agree on one thing: The gleaming complex needs some nimble money managers.
“We are in bad financial shape,” said Lim, the external affairs director. The project is over budget, the government is balking at additional investments, interest payments will top $246 million a year, and the airport isn’t expected to turn a profit for at least a decade.
However, most people at the sprawling site these days are more concerned with spending money than saving it as they rush to apply finishing touches to restaurants, customs booths, gift shops and jet ways.
Gliding over the sprawling marble flooring, janitor Cho Myong Hwan navigates his Zamboni-like cleaner among the cement bags, dangling wires and plastic tarps.
“I’m very busy,” he said, heading off to another part of the main terminal, the size of 60 football fields. “As you can see, there’s a lot of floor space here.”
Construction on the airport started in 1992 on an offshore site 30 miles west of Seoul. Two islands were leveled and their tops used to fill in the sea. Despite the landfill foundation, Inchon believes it can avoid Kansai’s sinking feeling. Whereas Kansai and Hong Kong were built in more than 130 feet of water and soft clay, Inchon had just 20 feet of fill to worry about.
Even then, developers waited three years for the ground to settle and drove in 16,000 pilings to stabilize the main building. The runway is rated not only for 747s but also for the next generation of heavier “flying cruise ships.”
Inchon officials also say they learned from Denver’s baggage fiasco, blamed on too much automation, by including manual overrides on most computerized systems. And they’ve tried to prevent Hong Kong’s cargo flap by spending lots of time and money on training and testing.
Although Inchon’s location has many selling points, it’s just 12 miles from the border with North Korea and two of its military bases. Officials are counting on advanced radar and coordination to prevent collisions or mishaps. On other fronts, although South Korea hasn’t had a major earthquake in living memory, the control tower was built to withstand a magnitude 7.0 temblor “just in case.”
Location hurts in another respect: Inchon is farther from Seoul than Kimpo and accessible only by a privately built, four-lane highway. Tolls of as much as $11 each way compare unfavorably with the free ride to Kimpo, which will remain open to handle domestic flights. There’s no other road, and funding shortfalls mean a planned rail link won’t connect Inchon to Seoul until 2007. Inchon’s passenger departure tax of about $12 will be 40% higher than Kimpo’s.
“Inchon will be much more inconvenient,” said Kim Jin Ho, a 50-year-old businessman. “And it’s a real burden to pay so much more.”
Then again, given the project’s financial condition, nobody expects things to get cheaper. Softening the financial blow could be a difficult task. The airport is 40% owned by the government and 60% by government-linked banks. The airport company hopes to cut its $3.1 billion in debt by selling off as much as 51% of the project to outside investors.
“I think the Inchon airport is good for Korea’s future,” said Kim Han Yee, a clergyman, while picking up his bag from a carousel at Kimpo, “if they can figure out a way to pay for it all.”
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World’s Busiest Airports
South Korea’s new Inchon airport figures to crack the ranks of the world’s leading airports. Capacity its first year will be 27 million passengers and 1.7 million cargo tons--building to 100 million passengers and 7 million tons by 2020. Existing airports ranked by passengers and cargo, 1999 figures:
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Total Change Rank Airport passengers from 1998 1 Atlanta (ATL) 78,092,940 6.3% 2 Chicago (ORD) 72,609,191 0.1 3 Los Angeles (LAX) 64,279,571 5.0 4 London (LHR) 62,263,365 2.6 5 Dallas/Fort Worth Airport (DFW) 60,000,127 -0.5 6 Tokyo (HND) 54,338,212 6.0 7 Frankfurt/Main (FRA) 45,838,864 7.3 8 Paris (CDG) 43,597,194 12.9 9 San Francisco (SFO) 40,387,538 0.7 10 Denver (DEN) 38,034,017 3.3 11 Amsterdam (AMS) 36,772,015 6.8 12 Minneapolis/St. Paul (MSP) 34,721,879 14.4 13 Detroit (DTW) 34,038,381 7.9 14 Miami (MIA) 33,899,332 -0.1 15 Las Vegas (LAS) 33,669,185 11.4 16 Newark (EWR) 33,622,686 3.2 17 Phoenix (PHX) 33,554,407 5.8 18 Seoul (SEL) 33,371,074 13.4 19 Houston (IAH) 33,051,248 6.5 20 New York (JFK) 31,700,604 2.1
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Total cargo Change Rank Airport in metric tons from 1998 1 Memphis (MEM) 2,412,907 1.9% 2 Hong Kong (HKG) 2,000,524 20.9 3 Los Angeles (LAX) 1,969,068 5.6 4 Tokyo (NRT) 1,841,572 12.5 5 New York (JFK) 1,728,203 7.7 6 Anchorage (ANC)* 1,657,633 28.6 7 Seoul (SEL) 1,655,345 16.2 8 Miami (MIA) 1,651,087 -7.9 9 Frankfurt/Main (FRA) 1,538,822 5 10 Singapire (SIN) 1,522,984 16.7 11 Chicago (ORD) 1,481,671 2.7 12 Louisville (SDF) 1,440,395 3.3 13 London (LHR) 1,355,417 4.2 14 Paris (CDG) 1,226,427 14.9 15 Amsterdam (AMS) 1,225,284 0.5 16 Newark (EWR) 1,093,642 0.9 17 Taipei (TPE) 1,055,370 15.4 18 Indianapolis (IND) 1,041,810 28.2 19 Dayton (DAY) 895,255 0.2 20 Atlanta (ATL) 883,123 -2.7
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Source: Airports Council International
