[From the Scene] Incheon Airport goes global to Batam, Indonesia

BATAM, Indonesia -- Indonesian workers in red vests and yellow helmets can be seen rushing to and fro across sparsely-situated construction sites at the airport, conversing animatedly as they carry metal rods and other construction equipment to fulfill their duties.

This airport, which is currently undergoing construction, is Batam Hang Nadim International Airport at Batam, Indonesia -- a 571 billion won ($440 million) public-private partnership led by a consortium between Korea's Incheon International Airport and its Indonesian partners, Angkasa Pura1 and state-run engineering and construction Indonesian company Wijaya Karya.

Operating under a build-transfer-operate business model, the project, which mainly includes building a new cargo terminal as well as a passenger terminal, expanding passenger facilities and renewing the existing terminal at Batam Airport, is set to be completed in 2047.

"Batam Airport is South Korea's first attempt in endeavoring to operate an overseas airport, as well as to develop it," said Choi Doo-sun, marketing director at PT Bandara Internasional Batam, an investment company under Incheon Airport established for the project bid.

According to Choi, Incheon Airport decided to invest in the renewal and expansion of Batam Airport mainly due to the region's growth potential as a tourist attraction and logistics hub.

"Batam, once a rarely visited region in Indonesia with its annual number of international visitors at1.2 million, has seen the number of its international visitors grow continuously at a compound annual growth rate of 6 percent from 2008 to 2019," said Choi.

"Currently, the region is the third-most visited region in Indonesia, after Bali and Jakarta," he added.

According to PT Bandara Internasional Batam, Batam was also an optimal place to operate an airport due to the region being designated as Indonesia's only free trade zone.

"Without the burden of taxation, tourists can enjoy cost-efficient services at the airport. Also, for maintenance repair and overhaul services at facilities in the airport, construction equipment is not subject to taxation, which means that low-cost MRO services can be provided to aircraft providers. Also, other low-cost carriers can also benefit from Batam Airport's low-cost MRO service, which contributes to the airport attracting more flights, ultimately," another official from PT Bandara Internasional Batam said.

Incheon Airport's main goal going forward is to expand Batam Airport's line of international flight routes, leveraging Incheon Airport's Northeast Asian networks. Currently, Batam Airport runs 17 domestic flight routes and two international flight routes.

"Batam has a strategic location positioned centrally among the fast-growing regions of Sumatera, Kalimantan, Sulawesi and it is in close proximity to international markets such as Singapore and Malaysia," said Choi.

Hence, the airport will focus on connecting Sumatera residents to international destinations and connecting international passengers to Batam, he said.

"After flying over 4.2 million passengers in 2019, the number of passengers dropped by 50 percent due to the effect of the pandemic. However, as of 2023, most of the passenger numbers have been recovered. We expect some 4 million passengers to use the Batam Airport by the end of 2023," said Choi.

According to Incheon Airport, until 2046, the number of passengers using the Batam Airport is expected to grow at an annual average of 6.3 percent, logging a total of 246 million people.