South Korea’s Incheon Aerotropolis leads the world in the combined magnitude, range and quality of commercial investment in both its airport city core and peripheral business and urban clusters. Its planning and development epitomize the principles of “thinking big, acting fast, and doing it right.”
The aerotropolis is anchored by dual central business districts: “Air-City” and Songdo International Business District (Songdo IBD). Incheon International Airport (ICN) hosts Air-City, an impressive array of office, convention, hospitality, shopping, leisure, and logistics complexes. A 13-mile, US$2.3 billion bridge links ICN and Air-City to Songdo IBD (formerly New Songdo City), a US$35 billion aviation-oriented smart city built on land reclaimed from the sea that cornerstones the much broader Incheon Free Economic Zone (IFEZ).
Together, ICN, Air-City, Songdo IBD and the IFEZ represent a paragon of airport, airport city and aerotropolis development. Their development paths and accomplishments can serve as models for successful airport, airport city and aerotropolis initiatives elsewhere. ICN routinely ranks at or near the top in airport industry surveys, laureled for its passenger experiences and services as well as its operational efficiency.
Its Air-City is unmatched in its range of high-end commercial facilities and appeal to affluent tourists. The IFEZ has arguably been more successful in attracting modern businesses than any other airport-area economic zone while Songdo IBD has evolved into a hyperconnected airport edge city (and precursor of many other smart, sustainable city initiatives) that limits sprawl, mitigates the effects of human activity on the environment and addresses growing demand for green development.
Air-City
ICN’s airport city, branded “Air-City” by its operator, the Incheon International Airport Corporation (IIAC), establishes the world’s highest standard for airport-property commercial real estate development.
It hosts a plethora of Grade-A office buildings, upscale retail and dining venues, 4-star and 5-star hotels, conference and exhibition centers, luxurious integrated resorts, health and wellness complexes, championship golf courses, and other recreation areas as well as logistics parks located in the airport’s Free Trade Zone that contain cold-chain, e-commerce and light manufacturing facilities.
Air-City’s commercial facilities not only generate substantial non-aeronautical revenue for IIAC but also make the airport a more attractive destination for business travelers, retail tourists, and affluent leisure travelers. Moreover, its modern cargo and logistics facilities within its Free Trade Zone contribute to the airport’s position as a leading cargo hub (consistently ranking it among the top five worldwide in international cargo volume) while improving the supply chain efficiencies of industries throughout the Incheon Free Economic Zone and beyond.
Over half of IIAC’s revenue was generated by airport commercial and logistics activities. The vast majority of non-aeronautical revenue originated from Air-City’s International Business Centres, its airport Free Trade Zone, and leisure and recreation complexes along with world class terminal retail.
ICN Free Trade Zone
Air-City’s 835-acre Free Trade Zone officially opened in September 2006. It is composed of two main sections divided by a golf course. The Airport LogisPark, an international logistics and manufacturing complex, is located on the northeastern side while the cargo terminal area is located on the southwestern side as are future Airport LogisPark facilities.
The cargo terminal area spans 282 acres. Companies with operations in the Free Trade Zone’s six cargo terminals include Asiana Airlines, Atlas Air, DHL, FedEx, Korean Air, Polar Air and UPS, amongst others. In addition to a 3.4-hectare international express mail center and a 2,000-square-meter U.S. military mail center, these facilities cover 65 acres and provide 3.5 million square feet of floor space.
The Free Trade Zone’s LogisPark, which also commenced operation 2006, covers 245 acres of facilities offering 5 million square feet of leasable space. When completed in February 2013, a second phase added 161 acres and 4.7 million square feet of leasable space used primarily for manufacturing where promoted qualifying firms have enjoyed complimentary use into the 2020s.
The first two phases cost US$154 million and the third phase of the LogisPark’s expansion is scheduled to add 80 acres for a total of 487 acres. Third-phase facilities are planned for small-and-medium-sized enterprises in express delivery and global logistics centers, including an e-commerce distribution center and specialized cool-chain facilities for high-value perishables. An average business occupancy rate of over 90% was attained by 2019 with 300 companies operating in the Airport LogisPark that year.
The airport’s Free Trade Zone was instrumental in establishing ICN as the leading air logistics hub of Northeast Asia as well as a global leader in air cargo volume. To increase airport non-aeronautical revenues while attracting firms in air logistics-oriented industries that augment ICN’s air cargo, Air-City grants a host of tax and tariff benefits to companies operating within its Free Trade Zone along with various incentives to entice investment. Land rent is reduced by 50%–100% for manufacturing and logistics companies that make qualifying investments while tariffs on the import and reexport of foreign goods are waived as well as taxes on manufacturing-related raw materials and machinery. These benefits are further reinforced by additional reductions and exemptions of business and income taxes conferred by the broader Incheon Free Economic Zone for companies in targeted industrial sectors.
There are other components of ICN’s remarkable airport city that are described in our research report, “The Incheon Aerotropolis: An Exemplar of 21st Century Airport-Centric Development” that can be found in the Publications link on www.aerotropolis.com. However, as detailed in that report, it is the airport’s three huge international business centers (IBC-1, IBC-2, and IBC-3) along with the airport’s free trade zone and logistics complex, that make its airport city tops in the world.