New Pulkovo Terminal To Take 3 Years to Build

New Pulkovo Terminal To Take 3 Years to Build

Pulkovo’s non-aviation activities make up 17 percent of its total revenue.

Published: June 22, 2011 (Issue # 1662)

The new terminal due to be built at Pulkovo Airport at a cost of 1.2 billion rubles ($43 million) will only appear in three years, and the airport’s management company has begun to change the rental agreements for retail tenants at the airport in order to gain maximum income from the existing terminals.

The territory of the airport should be used as effectively as possible, Sergei Emdin, general director of the VVSS (Vozdushnye Vorota Severnoi Stolitsy) consortium that manages the airport, said back in April. VVSS was last year given the airport to manage for 30 years after winning a tender to build a new terminal at Pulkovo the year before. The company pledged to invest 1.2 billion rubles in the construction.

According to Emdin, since Dec. 1 last year, rental rates have been dependent on the tenant’s turnover, and VVSS has started to take “up to several dozen percent” of tenants’ revenues. The income from Pulkovo’s non-aviation activities make up 17 percent of its total revenue, but the company’s aim is to increase that figure to 25 percent.

Previously, the airport’s passenger traffic was not large enough to generate the necessary sum of money to expand the airport’s retail premises. Today, airport traffic is only increasing by a little every year and it is only possible to set up a maximum of three new premises for rent occupying five to ten square meters each, said Fyodor Murygin, deputy director of VVSS’s non-aviation activities.

The airport contains 5,000 square meters of rental premises, which could bring the company $100 per square meter per month, estimated Nikolai Kazansky, chief manager of Colliers International in St. Petersburg.

The first food chain retailer at the airport, Rosinter, which arrived in 2007, has for a long time paid a percent of its revenue as well as a fixed rental rate, so the changes have had hardly any effect on the company, said Valeriya Silina, PR manager at Rosinter.

During the last five years, the percent of revenue payable has increased, but so has the restaurant’s turnover, she said.

For the pharmacy chain Pervaya Pomoshch, which had two outlets in Pulkovo, the new conditions turned out to be less profitable than the previous ones. The company has lost one of its outlets, which was given to another pharmacy, but it doesn’t plan on leaving the airport for good.

The new rules affect taxi drivers too. From May, they have been obliged to pay 20 percent of the value of each order to the Taxi Pulkovo management company. Those who don’t pay are not allowed to pick up or drop off their passengers within a 50-meter security zone. New Transport Company, which operates under the name New Yellow Taxi, declined to sign a contract with Pulkovo on such terms, said its director Felix Margaryan. He said he had not ruled out the possibility of appealing to the antimonopoly authorities.

Airports want their earnings from non-aviation activities to constitute more than 50 percent of their income, said a senior manager at one regional airport management company. Airport architecture can become an obstacle, however, as most airport buildings were constructed in Soviet times and were not designed to make a profit.

In Moscow’s Domodedovo airport, additional businesses (the sale of fuel and onboard catering) account for about 60 percent of total revenue. Aviation activities bring in 20 percent of revenue, and the remainder is generated by leasing out sections of the airport’s territory.

In 2009, non-aviation activities brought Pulkovo 770 million rubles ($27.5 million), or 16 percent of the airport’s revenue. Later reports have not been published.

In April last year, VVSS signed a loan contract with a group of banks including the European Bank for Reconstruction and Development (EBRD) Vneshekonombank, International Finance Corporation and Nordic Bank, which pledged 715 million euros for the construction of the new Pulkovo terminal. The airport management company has to put up the rest of the amount itself, which is why it needs to boost its revenue, said an employee of one of the banks. He also said that VVSS has fulfilled one of the conditions of the loan agreement — though several months later than agreed — which is to choose a chief constructor. VVSS selected a consortium of Italy’s Astaldi and Turkey’s Ictas Insaat. A VVSS representative declined to comment on the terms of the construction agreement.

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