Korea’s Incheon Airport to upgrade, operate Uzbek airfield in $140m deal

INCHEON – South Korea’s Incheon International Airport Corp. (IIAC) is set to upgrade and operate an airfield in Uzbekistan to expand the business portfolio of the peninsula’s state-run company into Central Asia.

IIAC said on Tuesday it was selected for a project worth 200 billion won ($140.4 million) to modernize and manage Urgench International Airport, served by about 700,000 passengers last year. IIAC, operator of South Korea’s main gateway Incheon International Airport, plans to sign a final contract after discussions in three months.

IIAC aims to build a new terminal by 2029 at the airport in Urgench, a district-level city in western Uzbekistan, and increase its capacity to 3 million passengers a year.

Urgench Airport, Uzbekistan’s third-largest airfield by passenger capacity, has strong potential to become a popular tourist spot as it is close to the ancient fortress of Ichan-Kala, a UNESCO World Heritage Site, IIAC said.

The airport is also likely to grow into a hub of the Silk Road Air Belt, which connects Uzbekistan’s major cities such as Tashkent and Samarkand, as well as neighboring countries including Kazakhstan and Kyrgyzstan, IIAC said. Uzbekistan’s flight demand is rapidly increasing, IIAC added.

“International passenger traffic at major airports increased 30% as Samarkand Airport, which was reopened last year after an expansion, more than doubled its passenger traffic last year,” said an IIAC official.

WHOLLY OWNED OPERATION

IIAC is set to sign a public-private partnership (PPP) agreement with Uzbekistan for the Urgench Airport with a 19-year concession period.

Under the terms of the project, IIAC will be responsible for the construction and management of both passenger and cargo terminals, including ground handling services. Meanwhile, Uzbekistan will oversee the construction and operation of the airfield infrastructure, including the runway and apron.

IIAC will secure a 100% stake in the terminal operation. It will mark the first time it obtains an entire stake in an overseas airport operation.

It has a 30% stake in a project to develop and operate Hang Nadim International Airport in Batam, Indonesia’s No. 3 tourist destination, and only 10% in a deal to operate Manila's Ninoy Aquino International Airport (NAIA), the Philippines’ main gateway, over the next 25 years.

IIAC has won 39 overseas airport projects worth $405 million in 18 countries since 2009, starting with the operations support project for the new airport in Erbil, Iraq.

Write to Junwan Kang at jeffkang@hankyung.com
 
Jongwoo Cheon edited this article.