Negotiations with Capital Airport group underway
By VEN SREENIVASAN
SINGAPORE Airport Terminal Services (SATS) is poised to significantly boost its footprint across China, thanks to its partnership with one of the country's leading airport operators.
BT understands that SATS is already in advanced negotiations with China's Capital Airport group to establish joint ventures in at least eight key secondary airports across the country, including Wuhan and Harbin.
If all goes to plan, the operations at these airports could be up and running within the next six to 12 months.
SATS chief executive Ng Chin Hwee declined to reveal details, but said his company had been working closely with Capital Airports. 'Yes, they've always been our partner and we already have a joint venture at Beijing Airport,' he said. 'As you know, we grow our businesses abroad via partnerships with established players, and we look forward to the opportunity to grow in China with Capital Airport.'
Capital Airport International Airport Company is one of the leading state-owned airport management groups in China, controlling over 30 airports around the country.
Besides Beijing Airport, it also has a strong network of secondary airports which handle traffic in excess of one million travellers.
SATS and the Chinese company already run two joint ventures in Beijing - Beijing Ground Services and Beijing Airport Inflight Kitchen. They have also joined hands to run ground services at Tianjin airport.
Separately, SATS announced another venture in Qingdao earlier this year.
But despite these start-ups, some analysts reckon SATS has not been as aggressive in building up its footprint in the fast growing China market as it should. In contrast, it seems to be poised to make better headway in India and elsewhere.
Several weeks ago, it announced a partnership with Air India for cargo and ground handling concessions at Bangalore. And its Taj-SATS Air catering franchise got the deal for catering at the New Bangalore International Airport, which begins operations in April 2008.
No sooner had this piece of news sunk in when it revealed that it was eyeing similar concessions at India's Hyderabad airport. And its footprint in India could grow even bigger if it wins similar deals in the country's four other major airports, in New Delhi, Mumbai, Chennai and Kolkata.
Elsewhere, it could also emerge as a major ground services player at Moscow's Sheremetyevo International Airport, which recently announced a tie-up with Changi Airports International (CAI) to manage a new terminal.
The mainboard-listed player, which is controlled by Singapore Airlines, currently gets about 28 per cent of its earnings from 16 joint ventures and associates at 26 airports in 10 countries throughout Asia.
Mr Ng recently said his company would continue to push aggressively for the expansion of its offshore businesses in the emerging markets of China, India and the Middle East, amid increasing competition on its home-ground at Changi Airport.
Analysts noted that SATS' offshore operations provide much better margins, compared to what it gets at Changi.
