As international travel is yet to recover, rental income dropped and non-aviation business became a higher priority.
Photo from CFP
By XUE Bingbing
Shanghai International Airport said on Jan 13 that it was setting up a joint venture to acquire 32 percent of issued shares in Hong Kong company Uni-Champion International and a 12.48 percent interest in CDF Sunrise Internet Technology. The total investment amounts to 1.7 billion yuan (US$252.5 million), Shanghai International Airport contributes 80 percent of the capital.
Sunrise Internet Technology operates e-commerce platforms of Sunrise’s duty-free shops at airports in Shanghai and Beijing. Uni-Champion holds a 49 percent stake in Sunrise Duty Free Shanghai, Sunrise Duty Free China, CDF Beijing Capital International Airport, and CDF Beijing Daxing International Airport.
Before Covid-19, Shanghai Pudong International Airport, one of the busiest international hubs in China and the core asset of Shanghai International Airport, was expected to bring in an average of 5.8 billion yuan annually from guaranteed rent income from tax free locations, which would amount to almost two-thirds of Shanghai International Airport’s annual revenue.
When international travel decreased drastically, contracts were renegotiated and rental income dropped to a fraction of the expected figure. The company took over the city’s other international airport, Shanghai Hongqiao, in June 2021 to avoid unnecessary competition and consolidate assets. But driving up non-aviation business remains a priority.
A research report from Guohai Securities points out that the latest acquisitions will allow the company to further develop its “duty free offline + bonded goods online” mode, a major trend of China’s domestic duty-free sector, and enhance its competitiveness in the non-aviation business segment.
With expectations of a gradual recovery of international air traffic, the airport sector opened and stayed high on Monday. Shanghai Airport Co., (600009.SH) soared a full 10 percent, reaching its highest since February 2021.