Appleby 24
Incheon International Airport Marketing Case & Strategy Analysis
Team name: Appleby
Team Leader: Hyunwoo Shin (University of British Columbia)
Team members: Chan Young Byun (York University), Chieun Ahn (Queen’s University),
Han Gyul Cho (Emory University)
Team member Introduction & Career Plan
Team leader: Hyun Woo Shin
l School: University of British Columbia
l Year: 3rd year
l Major: Accounting
l Contact Information:
l My careere plan is to study accouting, and becoming an ____ analyst at Wall Street.
Team member: Chan Young Byun
l School: York University
l Year: 3rd year
l Major: Business Administration
l Contact Information:
l After graduating from university, I would like to work at a global consulting agency and become a well-known consultant.
Team member: Chieun Ahn
l School: Queen’s University
l Year: 3rd year
l Major: Commerce
l Contact Information: 010-4773-6897 /
l I am open to both working in Korea and abroad. I would like to continue my passion for marketing and advertising after graduation. I am also interested in education administration.
Team member: Han Gyul Cho
l School: Emory University
l Year: 3rd year
l Major: Economics
l Contact Information:
l I would like to study financial engineering in graduate school. Upon finishing the study, I would like to become an economics researcher.
Table of ContentsI. Executive Summary
II. Introduction to Incheon International Airport
III. History of Incheon International Airport
IV. Background Establishment of Incheon International Airport
V. Early Stage’s Hardship and Challenges
VI. Incheon International Airport - SWOT Analysis
1. Strengths
2. Weaknesses
3. Opportunities
4. Threats
VII. Hub Airport - Definition and Necessity
VIII. Incheon International Airport Duty Free Shops – Introduction and Marketing Strategy
1. Early Stage
2. Introduction of Airport Duty Free Shops
3. Airstar Avenue Performance
4. Airstar Avenue’s Marketing Strategies
5. Airstar Avenue’s Challenges
IX. Airline Attract Strategies
1. Early Stage
2. Number of Airlines and Destinations Offered
3. Operation Performance
X. Incheon International Airport’s Service & Accommodation Strategies
1. Customer Service and Accommodation
2. Employee Training and increase in satisfaction level
XI. Differentiation of the Airport Support Facilities
1. Outsourcing
2. Analysis of Operation Systems
XII. Difficulties and Challenges after opening
1. Accessibility
2. Construction of New Southeastern Airports
3. Recession
XIII. The Future of Incheon International Airport - Recommendation
1. Introduction of the High-Speed Airport Railroad
2. Development of adjacent cities
3. Development of China’s niche market
XIV. Final summary and conclusion
XV. Reflection on final competition
XVI. References
Incheon International Airport has become the number one airport in the world, just within ten years of operation. As a gate to Repulic of Korea, it has played a huge role in putting the name “Repulic of Korea” out to the world. It has been contributing significantly in increasing national brand power. Thus, analysising its successful marketing strategies would help not just us, but the others about the key factors that has lead to such success.
The Future of Incheon International Airport - Recommendation
l Introduction of the High-Speed Airport Railroad
l Development of adjacent cities
l Development of China’s niche market
II. Introduction to Incheon International Airport
Our country is in the rapid wave of world trade liberalization in the 21st century, and under the abrupt changes in politics, economy and society as well as in the process of sophistication in industrial levels, which in turn has brought an expectation of advancement onto tourism and service industry and, on account of dazzling development in information communications, a new paradigm of life in human societies has been launched through the borderless world economy and the globalization of exchanges in culture and information.
In the past, our country had various airports that had not played their proper roles in a systematic way. To manage and operate each one in an efficient way, it is required to play its own prime role. A small local airport cannot take a place of an international one; Incheon International Airport cannot allow light planes to take off and land. In the similar way, by considering various conditions and environment such as the geographical position, accessibility, demand aspects, and software profiles, each airport is to be assigned and operated to take a peculiar role suitable for each one.
Incheon International Airport was constructed in order to plat its role as the Hub airport in Northeast Asia according to the industrial development and globalization to increased demand for aviation transportation. Started in 1992, more than 7,000,000,008,000 billion won in total cost has been put the construction of Incheon International Airport for eight years and four months and it was opened March 29, 2001. The opening of Phase 1 was completed at the time of gongsaman, Incheon International Airport; meeting annual 170,000 aircraft operations through the 27 million passengers and 1.7 million tons of cargo were transported.
The potential of the Northeast Asian aviation market, including South Korea, has been most appreciated in the world. It is expected that there will be competitions among regional countries as well as the world’s leading airlines for the future advantage in the region. In such a competitive environment, the opening of Incheon International Airport has large significance value.
Despite the late construction of Incheon International Airport compared to other competitors, it has the full potential in terms of location or facility system. Based on the largest advantage, the shortest route between Europe and The United States, Incheon Airport is able to build varied network and high-density routes so it is advantageous for Incheon Airport to attract a lot of cargos and passengers. In addition, compared to other competing airports, Incheon Airport can hold up some strong advantages that are lower airport charges, a 24-hour capable of landing, and the possibility of expansion of the rear region.
Since the opening of Incheon International Airport under 10 years operating periods, Incheon Airport has received the world's second largest international cargo and the world's top 10 international passengers. In 2009, ‘Sky Trax’, one of the best research firms specializing in aviation services in the UK, has chosen Incheon International Airport as the best airport in the world. Incheon Airport has won consecutive awards for best airport in the world rewarded by Airports Council International (ACI). It also has won the world’s best airport award for three consecutive years by the U.S. global traveler. Incheon Airport is continuously growing for the best in services, operations and cargo system.
Facilities of Incheon Airport are separated as passenger terminal facilities, freight terminals, dock facilities, and navigation safety facilities, transportation facilities. Passenger terminal facility has 270 check-in counters, 120 ports of passport and 28 security checkpoints. It has the capacity of handling 6400 passengers per hour.
Cargo terminal has a facility, which could hold 24 aircrafts at the same time, and its annual cargo capacity is 4.5 million tons. The ground control communications has been installed in control tower, which is 100m above the ground and it has the aircraft’s landing instrument and cover facility that help aircrafts land the runway with visible distance of 50m.
In 2020 when final construction is completed, there would be additional five runways. It is expected that the size of passenger terminal would be increased to 1,146,000 ㎡, 100 million people in passenger and freight 1,000 million tons. The number of flights is expected to increase up to 740,000-circuit annually.
III. History of Incheon Airport
’01.03.29 / The opening of Incheon International Airport’03.09 / Asia's first CAT-IIIb (100m line of sight can be landed) operating
’05.10 / Achieved a cumulative passenger 100 million people
’06.03 / Incheon International Airport opened a free trade area
’06.06 / Reached a cumulative 10 million tons cargo
’06.08 / Achieved one hundred thousand people visitor one day
’07.03 / Achieved the world's # 1 airport rating for two consecutive years
’07.04 / Released unattended check-in (self-check)
’07.07 / Cargo terminal investment AACT and DHL
’07.10 / Achieved 1 million accident-free flying
’08.02 / Achieved the world's # 1 airport rating for three consecutive years
’08.06 / Step 2 Grand Opening and Start of operation
’09.02 / Supported Arbil, Iraq, the new airport expansion consulting operations
’09.03 / Achieved a cumulative passenger 200 million people
’09.03 / Continuous operation in navigation safety facilities 70,000 hours
’09.04 / Achieved the world's # 1 airport rating for three consecutive years
’09.06 / Named Gonghangsang Skytrax World's Best Awards
’09.12 / Selected as Global Traveler Award for four consecutive years
’09.12 / Reached Transit passengers 5,000,000 people annually (in 2009)
’10.09 / President of the 34th National Productivity Award (Korea Productivity Center)
’11.01 / Selected as Global Traveler Award for five consecutive years
’11.02 / Korea's Most Admired Companies for four consecutive years (Korea Management Association Consulting)
’11.02 / Achieved the world's # 1 airport rating for six consecutive years (ACI)
IV. Background Establishment of Incheon Airport
Due to increased demand for aviation, Kimpo International Airport had reached its maximum capacity of passenger and cargo operations, new airport development project had to be driven. In the early 1980, the Government of the Republic of Korea selected 22 new airport candidates around Seoul based on the criteria of regional routes, aircraft obstacles, weather condition, noise, land use and accessibility. After the government closely examined above conditions and in 1990, YeongJong Island area was selected as the best candidate of new airport project. In 1992, Incheon International Airport went into construction in order to accommodate the Northeast Asian aviation demand and aim to be further international HUB airport.
V. Incheon Airport - Hardship and Challenge
Incheon International Airport is currently one of the most successful national projects being evaluated, but at the time of construction and until the opening, it faced with much opposition and could not be free from the pessimistic comments. Opponents of the development of new airport cited land imbalances, natural disasters and environmental degradation, and the difficulty of financing as main reasons.
Fearing about the concentration of metropolitan, they argued to extend the Cheongju International Airport for balanced regional development. In addition, they opposed the construction of Incheon Airport based on argument that environmentalists concerned about the physical conflict with birds, a thick fog and the reclamation of mud flat, which is not environmentally right. They also have warned that it causes enormous damage to the coast of Incheon if deep-sea tidal storms and typhoons from the West Sea hit at the same time. Another concern was the shrink of runway caused from the weakness of landfill.
However, the government and the Incheon International Airport Corporation pushed the construction of a new international airport, Incheon International Airport was selected as the world’s best airport after 10 years.
The imbalance development of regions, one of concerns from opponents, is acting as one of advantages of Incheon International Airport since it attracts transit passengers compared to other competing airports in Japan, China and several others. Also, YeongJong Island is close to Seoul, another advantage of Incheon Airport. Even Kimpo Airport was closer to Seoul, it had environmental disadvantage such as a fog and noise. In contrast, Incheon Airport is able to operate 24-hours because it is located in non-residential region.
Incheon International Airport is located on the island so it has even more outstanding possibility to expand further than other competing airport in Korea. St. Acquired 17,000,000 pyeong, 18 times larger than YeoEi Island, Incheon International Airport finished the first business phase using only 421 million pyeong. Incheon Airport still has left out with 1300 million pyeong, so no further construction work is necessary to expand. In contrast, For Hong Kong International Airport (155 million pyeong) and Kansai International Airport (378 million pyeong) respectively, further expansion works are needed for them to expand the area but it is costly so they are having difficulties. Kansai airport and chekrapkok airport had spent 30 trillion won and 24 trillion won respectively for expansion projects that are more than 3 times of the Incheon International Airport Expenses (7.8 trillion won).
Unlike the concern that reclaimed ground is not firm, it is known that they showed little or no damage from reclaimed ground since the opening of Incheon International Airport. It is because Incheon Airport is constructed on tidal flats. In contrast, Kansai International airport, build on filled sea, has subsided 11 meters for 6 years since the opening in 1994. Cost of emergency repair work has already committed 80 million yen per year, but it is expected to subside 2 meters per year, the astronomical maintenance costs are expected to commit.
Cheap airport usage fee is one of advantageous factor to increase the competitiveness of Incheon Airport. Incheon airport has advantage over other competing airport such as Kansai airport, Pudong airport and Hong Kong airport in term of the fee for taking off and landing. Incheon airport has charged $2800 which is 19.7% increased amount from the charge by Kimpo airport. Compared to this, Kansai has charged $8844, Pudong airport, $5087 and Hong Kong airport, $5063 respectively.
The reason for Incheon airport’s cheap facility is due to lower construction cost. Kansai spent 135 billion dollar and Chek Lap Kok spent 90 billion dollar on their constructions. Their costs were expensive because they had to harden the ground to build airport but since Incheon airport was built on mud flats so it was cheaper.
Finally, the Incheon International Airport constructed 15 ㎞ miles away from the mainland minimizes the damage from aircraft noise. Therefore, Incheon International Airport is able to operate 24-hour and the role of hub airport can easily be digested.
VI. Incheon International Airport - SWOT Analysis
(1) Strengths
The benefit of Incheon airport is convenient and prompt immigration service. By installing unmanned immigration service, Incheon airport shorten the immigration time and is efficiently linked to the airlines, security, search and customs so that the average time per person is between 12 minutes to 16 minutes. Compared to international departure average time, 60 minutes, and immigration average, 45 minutes, Incheon airport has shortened the time dramatically.