Failed Bids at Incheon Airport Duty-Free Shops Due to High Rent... 2 Locations Unsuccessful from the Start

On the 23rd, the duty-free area at Terminal 1 departure hall of Incheon International Airport was bustling with passengers preparing to travel abroad. Incheon International Airport Corporation forecasted that 1,039,144 passengers (an average of 207,829 per day) would use the airport from the 23rd to the 27th, including the Lunar New Year holiday period.
Yeongjongdo - Photo by Kim Hyunmin kimhyun81@

[Asia Economy Reporter Seungjin Lee] The bidding for the duty-free business rights at Incheon International Airport Terminal 1 (T1) failed to attract as much interest as initially expected. Two areas, the perfume and cosmetics (DF2) business rights and the fashion and miscellaneous goods (DF6) business rights, were canceled due to insufficient bidders.

According to industry sources on the 27th, Lotte, Shilla, Shinsegae, and Hyundai Duty Free, which had registered bids for the five large-scale business rights at T1, officially submitted their business proposals and price bids, entering the bidding process in earnest.

The bidding zones for large corporations include DF2 (cosmetics and perfume), DF3 (liquor, tobacco, and packaged food), DF4 (liquor and tobacco), DF6 (fashion and accessories), and DF7 (fashion and accessories), totaling five areas. Shilla Duty Free operates DF2, DF4, and DF6 zones, while Lotte and Shinsegae Duty Free operate DF3 and DF7 respectively.

Among these, DF7 was the only business right for which all four companies submitted bids. In the DF3 and DF4 zones, Hotel Lotte and Hotel Shilla will compete for operating rights.

However, there were no bidders for the DF2 zone, which is considered the core and generates the highest sales in the industry. Additionally, Hyundai Department Store Duty Free was the sole bidder for the DF6 fashion and miscellaneous goods zone, resulting in the cancellation of the bid due to lack of competition.

Industry insiders cited the high rental fees at Incheon International Airport as the reason for the bid cancellations. An industry official stated, "Incheon International Airport duty-free shops operate under a fixed rent system, and the high rent is burdensome," adding, "We plan to explore other locations such as duty-free shops operated by Korea Airports Corporation under a variable rent system."

Earlier, the Korea Duty Free Association sent an official letter to Incheon International Airport on the 13th requesting a temporary reduction in rent. Due to the recent decline in airport passengers caused by the COVID-19 pandemic, sales have plummeted, making it difficult to operate under the 'minimum guarantee' fixed rent system.

Incheon International Airport may conduct additional bidding for the two canceled zones. The additional bidding will be announced again under the same conditions. If the bid is canceled again under the same conditions, the initially set rental fee may be adjusted at that time.

Meanwhile, Incheon International Airport, having received business proposals and price proposals outlining duty-free operation plans, will conduct a comprehensive evaluation next week, select a preferred negotiation partner around mid-March, and proceed with contract signing. Subsequently, the Korea Customs Service will review and grant the license in April, with operations commencing in September.