[Exclusive] Amid Expansion of Arrival Duty-Free Shops... Entas Duty Free Selected for Gimhae Airport

5-Year Lease Operation at Gimhae International Airport
International Passengers Rank 2nd After Incheon International Airport
Korea Airports Corporation Expands Duty-Free Shops at Regional Airport Arrival Halls
Considering Introduction at Gimpo, Cheongju, Jeju Based on COVID-19 Trends

Entas Duty Free Shop at Incheon Airport Terminal 2 Arrival Hall. Photo by Entas Duty Free

[Asia Economy Reporter Cha Min-young] Amid the government's policy to expand arrival duty-free shops, the operating rights for the arrival duty-free shop at Gimhae International Airport have been awarded to the mid-sized duty-free company Entas Duty Free. However, given that the COVID-19 pandemic is still ongoing, it is expected that the business pace will be adjusted while monitoring future developments.

On the 9th, according to Korea Airports Corporation and the duty-free industry, Korea Airports Corporation recently conducted a public bidding for the operator of the arrival duty-free shop at Gimhae International Airport and selected Entas Duty Free as the preferred negotiator. Once Entas Duty Free obtains approval from the Korea Customs Service, it will lease and operate the duty-free shop for the next five years.

The arrival duty-free shop will be located on the first floor of the international arrivals hall at Gimhae International Airport, covering an area of 89.75m2. The products sold will include liquor, tobacco, perfume, and cosmetics. The corporation projected annual sales of 5.3 billion KRW and a minimum operating rate of 23.2%. Korea Airports Corporation exempts basic rent at regional international airports and calculates rent based on monthly sales fluctuations during the operation period.

The arrival duty-free shop is a special bonded sales outlet designed to allow Korean travelers to conveniently purchase products on their way back home after their trip. The first such shop opened at Incheon International Airport on May 31 last year. This initiative aims to resolve the inconvenience of carrying duty-free goods purchased on departure throughout the trip and to shift overseas consumption back to the domestic market. It also considers the effect of dispersing crowds at duty-free product delivery areas and job creation.

As a result, the number of Entas Duty Free-operated stores will increase from five to six. Currently, Entas Duty Free operates five locations: Paradise City main store, Incheon International Airport Terminal 1 and Terminal 2 departure halls, Terminal 2 arrival hall, and Incheon Port branch. For the company, this marks its first expansion into cities outside its main area of Incheon.

In particular, Gimhae International Airport, among regional international airports, has relatively high passenger traffic, attracting interest from small and mid-sized duty-free operators. From January to December 2019, Gimhae Airport had 9.59 million international passengers, ranking second after Incheon (70.58 million). It was followed by Gimpo (4.27 million), Jeju (2.67 million), and Daegu (2.58 million). Considering the increase in international demand, Gimhae International Airport has been undertaking an international terminal expansion project since January last year, aiming for completion by October 2022. With a total investment of 84 billion KRW, a new terminal with two floors and a total floor area of 18,000㎡ will be constructed to secure an annual capacity of 2 million passengers.

The government is also increasing the number of arrival duty-free shops at regional international airports. In March, City Plus was selected as the operator for the departure and arrival duty-free shops at Muan International Airport in Jeolla Province. Gimpo International Airport is conducting facility construction for the arrival duty-free shop from March to June. The selection of the duty-free operator is expected to take place in the second half of the year, after June.

A Korea Airports Corporation official stated, "We plan to gradually expand the installation of arrival duty-free shops at regional international airports such as Gimpo, Jeju, and Cheongju, but due to the current COVID-19 situation, it is difficult to disclose specific introduction schedules or plans," adding, "However, the policy to expand arrival duty-free shops remains unchanged."

A representative from a small and medium-sized duty-free company said, "Among various regional international airports, Gimhae Airport attracted attention due to its high flight frequency," and added, "Once the duty-free business normalizes after COVID-19, demand is expected to recover, so everyone will focus on attracting arrival duty-free shops to increase their buying power."