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Hyundai E&C consortium withdraws from Gadeok airport project in Busan

Published: 09 May. 2025, 15:58 Updated: 11 May. 2025, 17:28

Layout plan of the Gadeokdo New Airport [MINISTRY OF LAND, INFRASTRUCTURE AND TRANSPORT]

A Hyundai Engineering & Construction (Hyundai E&C) consortium has withdrawn from the site preparation project for the new airport on Gadeok Island, Busan. The government said Thursday that it had initiated the process to cancel the negotiated contract with the consortium.

The Ministry of Land, Infrastructure and Transport plans to find a new contractor, but given the circumstances, it is unlikely a successor will be easily found, prompting concerns that the airport project may face significant delays.

“Because Hyundai E&C refused to revise the basic design, a negotiated contract cannot be concluded under national contract law,” said Kim Jeong-hee, director general of the Gadeokdo New Airport Construction Office at the Land Ministry.

The Land Ministry requested to revise the project's basic design, which involved a construction period of 108 months, around two years longer than the original bid requirement of 84 months, according to Hyundai E&C.

The company stated that 17 months were needed to stabilize the soft ground under the sea and another seven months were needed to adjust the construction sequence, resulting in a total of 24 extra months.

In October last year, Hyundai E&C was selected as the negotiated contractor for the site preparation project, which includes reclaiming 6.67 million square meters (71.8 million square feet) of land, building one 3,500-meter (2.17-mile) runway, 12 taxiways, 72 parking stands, breakwaters and aviation safety facilities.

The project is valued at 10.5 trillion won ($7.48 billion), making it the largest design-build project in the history of Korea. The consortium included Hyundai E&C with 25.5 percent stake, Daewoo Engineering & Construction with 18 percent and Posco E&C with 13.5 percent.

Lay out of the Gadeokdo New Airport [MINISTRY OF LAND, INFRASTRUCTURE AND TRANSPORT]

In response, the Ministry has begun procedures to halt the negotiated contract and announced plans to minimize delays by using Hyundai E&C’s basic design and the airport’s master plan. The ministry, together with the Gadeokdo New Airport Construction Authority’s joint task force and an expert advisory panel, intends to prepare measures to recruit a successor contractor.

However, experts in the airport construction sector say it will be difficult to find a replacement. In the previous four bidding rounds, no companies participated except Hyundai E&C, forcing the ministry to switch to a negotiated contract in the fourth round.

Moreover, the contract terms were adjusted to allow essential airport facilities to be completed by the end of 2029, with an additional two years allocated for auxiliary facilities.

Despite these revised conditions, Hyundai E&C submitted a basic design that demanded two more years and refused to make revisions, ultimately nullifying the already complicated contractor selection process. Due to these developments, few construction firms are expected to step forward for the follow-up bid.

“Hyundai E&C was not particularly interested in joining the Gadeokdo Airport project, but it is understood that the government strongly urged their participation, leading them to accept reluctantly,” said an industry source from the engineering sector, speaking on condition of anonymity.

As a result, not only is the goal of opening the airport by 2029 virtually unachievable, but a substantial delay in the airport's actual opening is now seen as inevitable.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KANG KAP-SAENG [[email protected]]