“To attract and retain tenants, we also introduced a revenue-sharing component in the Monthly Minimum Guarantee to have a lower fixed rental base and create win-win partnerships,” Ma Yan shared. This model successfully differentiated Chongqing from other Chinese airports and attracted a myriad of brands to the airport. These include the Audi VIP Service Center, the first hybrid CIP lounge and car model showroom in a Chinese airport, and 厉家菜 (Family Li Imperial Cuisine), a two-star Michelin restaurant which opened its first outlet in Western China at Chongqing Airport.
Overcoming business disruptions from Covid-19
In 2020, the Covid-19 pandemic caused a drastic decline in traffic worldwide. To retain tenants and conserve cash, the joint venture offered rental rebates to tenants beyond the state mandate, making Chongqing Airport one of the first airports in China to do so.
The joint venture also drove initiatives to help tenants recover lost sales and generated new revenue streams. In March 2021, the company launched a new app on WeChat to help tenants expand their sales channels and catchment areas.
With the Covid-19 situation under control, China’s domestic traffic recovered rapidly from July 2020. Chongqing Airport was the fourth busiest in China in 2020, entering the league of top five for the first time.
With these initiatives and the traffic recovery, the joint venture remained profitable in 2020. However, Ma Yan foresees headwinds in renewing contracts or signing on new tenants, given the uncertainties in global traffic recovery.
Still, she hopes that Chongqing airport can be the benchmark for other Chinese airports to emulate. “This is the first commercial joint venture between Changi and a Chinese airport. Besides being profitable, I hope to test-bed new concepts and look for constant breakthroughs in retail operations, tenant management and brand amassment,” she shared.