Incheon Airport T1 duty free operations being run on temporary contracts by...

Incheon Airport T1 duty free operations being run on temporary contracts by Hyundai, Kyung Bok Kung and Shinsegae – The Moodie Davitt Report


SOUTH KOREA. Incheon International Airport’s Terminal 1 duty free stores, formerly run by Lotte Duty Free and The Shilla Duty Free, are being operated by Kyung Bok Kung Duty Free, Hyundai Department Store Duty Free and Shinsegae Duty Free on temporary contracts from this month until new permanent contracts are in place.

As reported, the Lotte and Shilla concessions expired at the end of February. Both retailer’s concessions expired in August but were extended for six months after new bidders backed out amid the worsening COVID-19 pandemic. Under the Korea Customs Act, contracts can only be extended once.

Incheon International Airport Corporation President Kyung Wook Kim pledged a rapid follow-up in stabilising duty free retailing at the airport. Photo: Incheon International Airport Corporation

Incheon International Airport Corporation (IIAC) announced in a statement in late February that between them, Shinsegae, Hyundai and Kyung Bok Kung would operate three of the four duty free locations (DF3, 4 and 6) previously held by the two sector giants. The former DF2, once one of the world’s most valuable airport perfumes & cosmetics contracts, has been closed due to the financial pressures caused by the pandemic.

Incheon International Airport Corporation President Kyung Wook Kim said that the temporary arrangement came through close cooperation between the corporation, government agencies, and duty free retailers. While the agreement provides jobs for some former Lotte and Shilla employees, not all roles could be retained, he noted with regret.

Kim pledged rapid follow-up in terms of reviewing future bidding conditions and helping to stabilise employment for airport duty free staff.

An unprecedented crisis: The Korea Times reports how Incheon International Airport Corp is “striving to keep duty free shopping alive” at what for many years has vied with Dubai International (Dubai Duty Free) as the world’s number one airport duty free sales location

IIAC said it had striven to support the duty free sector through rent reductions and exemptions amounting to KW476 billion (US$424.3 million), payment delays of KW240 billion (US$213.9 million), and agreement on flexible opening hours. “We are doing our best for a win-win development with the duty free industry,” the corporation said.

Incheon International Airport suffered a net loss of KW426.8 billion (US$380 million) in 2020 as it plunged into the red for the first time in 17 years. International passenger traffic fell -83% year-on-year.

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