SM Duty Free, Incheon Airport Operations and Rebid Abandoned... "It Will Be a Signal for Expulsion"

SM, Amid COVID-19 Challenges
"Incheon Airport Corporation's Discriminatory Attitude is a 'Problem'"

[Image source=Yonhap News]

[Asia Economy Reporter Cha Min-young] SM Duty Free, a mid-sized duty-free operator, officially announced on the 6th that it will forgo the extension of its business and re-bidding at Incheon International Airport Terminal 1.

Kim Tae-hoon, CEO of SM Duty Free, released a statement on the same day, saying, "We are striving to survive amid the prolonged recovery from the novel coronavirus disease (COVID-19), but as a company focused on operations at Incheon Airport, the rent is a difficult issue to resolve."

He added, "Although mid-sized companies were excluded from the initial government rent support and later included in additional support in April and June, they received differential support compared to small businesses within the same business rights. After reconsidering the extension of operations at Terminal 1 and the upcoming re-bidding, due to accumulated business deterioration, we will withdraw from the Terminal 1 departure duty-free store on August 31."

Previously, SM Duty Free was selected as the first small and mid-sized business operator at Incheon Airport in 2015 under the government's small and mid-sized enterprise support policy and operated the business for five years. This year, they planned to expand duty-free stores at airport arrival halls nationwide along with the 4th re-bidding at Incheon Airport, but the COVID-19 variable this year caused the plan to fail.

In fact, the number of confirmed COVID-19 cases worldwide is breaking records daily. Over 10 million people have been diagnosed in six months, and with delayed recovery in major regions such as the Americas, Southeast Asia, and Europe, Incheon Airport has raised its emergency operation to Level 1. This includes partial closure of airport facilities, making normal sales generation difficult.

Particularly regrettable is the discriminatory attitude of Incheon International Airport Corporation. A representative of SM Duty Free stated, "The airport rent support policy related to COVID-19 focused on a dichotomy between large corporations and small businesses, resulting in differential support for mid-sized companies within the same bidding and operating business rights. This will lead to business deterioration and store closures for mid-sized companies in the future, and this decision to forgo extension and re-bidding will signal the exit of mid-sized duty-free stores after COVID-19."

Furthermore, SM Duty Free expressed its position to re-request support to avoid additional disadvantages such as lump-sum payment of six months' unpaid rent due to contract expiration. They also argued that small and mid-sized duty-free operators, who were excluded from negotiation tables between large duty-free stores and the airport, should be included in negotiations to discuss future solutions together.