'Annual Sales of 1 Trillion Won' Incheon Airport Duty-Free Operator Selection Kicks Off

'4th Term 1st Passenger Terminal Duty-Free Business Rights' Bid Announcement
Annual Sales of 1 Trillion KRW... Total 50 Stores, 11,645㎡ Area
Intense Competition Among Major Corporations Including Lotte, Shilla, and Shinsegae

Over the past year, the number of passengers using Incheon International Airport exceeded 70 million for the first time since its opening in 2001, setting a new annual passenger record. According to Incheon International Airport Corporation, the total number of passengers using Incheon Airport in 2019 was approximately 71.17 million, an increase of about 4.3% compared to the previous year. The photo shows the duty-free area of Incheon Airport on the 9th.
Yeongjongdo - Photo by Kim Hyunmin kimhyun81@

[Asia Economy Reporter Seungjin Lee] The selection process for duty-free shop operators at Incheon International Airport Terminal 1 has begun. With an annual sales scale of 1 trillion KRW, fierce competition among major duty-free shop operators is expected.

Incheon International Airport Corporation posted a bid announcement on the 17th for the "4th Term Terminal 1 Duty-Free Business Rights." The business rights up for bid include a total of 8 zones: 5 for large corporations and 3 for small and medium-sized enterprises. The total area covers 50 stores (11,645㎡).

The most attention-grabbing zones in this bid are the five zones for large corporations: DF2 (Perfume & Cosmetics), DF3 (Liquor & Tobacco), DF4 (Liquor & Tobacco), DF6 (Boutique & Accessories), and DF7 (Boutique & Accessories). These zones have an annual sales scale of 1 trillion KRW.

Among these, DF2, the zone with the highest sales, has a minimum guaranteed amount (rent) of 127.71 billion KRW. DF3 is 76.67 billion KRW, DF4 is 70.18 billion KRW, DF6 is 48.51 billion KRW, and DF7 is 44.66 billion KRW, totaling approximately 370 billion KRW.

The duty-free industry expects the bidding competition to take place at levels 20-30% higher than the minimum guaranteed amounts presented.

Companies wishing to participate in the bid must submit their business proposals and price bids by the 27th of next month. Participation in bids for all five business rights is possible, but multiple awards for the same product category within the same business right are prohibited.

However, in this bid, DF3 and DF6 will be combined as an integrated business right with the boarding terminal. This is intended to attract bidders' interest by bundling the relatively lower sales boarding terminal, and from August 2023, part of the boarding terminal DF1 business right will be operated in an integrated manner.

Incheon Airport Corporation will evaluate proposals with a 60% weight on business proposals including duty-free operation experience, marketing, and product composition, and 40% on bid price to select a single successful bidder (operator). The basic contract period is 5 years, with an option to extend for an additional 5 years, allowing a maximum operation period of 10 years if evaluation results are met.

Meanwhile, among the five zones up for bid, DF2, DF4, and DF6 are currently operated by Shilla Duty Free, DF3 by Lotte Duty Free, and DF7 by Shinsegae Duty Free. Shilla Duty Free, which operates three of the zones up for bid, plans to focus on retaining its position.

In particular, the perfume and cosmetics sales business right, expected to be the most competitive due to high sales, is a zone Shilla Duty Free is determined to secure.

In addition to existing operators Shilla, Lotte, and Shinsegae Duty Free, Hyundai Department Store is also expected to join the bidding, making the competition even fiercer.

This content was produced with the assistance of AI translation services.