Court Orders 25% Rent Cut for Duty-Free Shops; Incheon Airport to File Objection

The court has issued a compulsory mediation order stating that Incheon International Airport Corporation must reduce duty-free shop rent by approximately 25% amid the ongoing dispute with Shilla Duty Free over airport duty-free shop rent.

According to industry sources on September 8, the Incheon District Court sent a compulsory mediation proposal to the legal representatives of Incheon International Airport Corporation and Shilla Duty Free, stating that an appropriate rent level would be about 25% lower than the existing rate. This amounts to 6,717 won per customer, which is 2,270 won less than the 8,987 won per customer rent proposed by Shilla Duty Free.

The corporation plans to file an objection to the court's compulsory mediation proposal. The court's compulsory mediation proposal does not carry legal force.

Lee Hakjae, President of Incheon International Airport Corporation, stated at a press briefing on July 17, "Reducing rent would cause unfairness to other duty-free operators who competed at the time," adding, "Since artificial adjustment could cause confusion, it is difficult to accept rent adjustment."

Yonhap News Agency

Previously, Shilla Duty Free and Shinsegae Duty Free requested a 40% rent reduction from the corporation, citing operating losses, and applied for court mediation. At the first mediation session, the corporation stated that it could not reduce the rent and did not attend the second session. As a result, the court viewed the mediation as having failed and presented a compulsory mediation proposal.

With the compulsory mediation proposal delivered on this day, Shilla Duty Free is expected to consider its response strategy during the two-week objection period. If they decide to withdraw, they will each forfeit 190 billion won in penalty fees. In addition, they are required to continue operating for six months from the date they declare their intention to withdraw. The corporation plans to complete the process of announcing and selecting new operators during this six-month period. The two duty-free shops may also face penalties if they participate in future bids. The corporation evaluates the reliability of duty-free operators' business performance over the year preceding the bid announcement and reflects this as a qualitative score (5 points) in the evaluation.