Government Cuts Airport Rent by 20%... Duty-Free Shops Relieved from "Zero Sales Cliff"

Lotte Duty Free temporarily suspended operations at the international terminal duty-free store of Gimpo International Airport on the 12th. This decision was made due to the sharp decline in flights and passengers at Gimpo Airport caused by the global spread of COVID-19. Photo by Moon Honam munonam@

[Asia Economy Reporter Seungjin Lee] On the 1st, the Ministry of Economy and Finance announced a 20% reduction in rent for large and medium-sized enterprises operating airport duty-free shops, prompting the duty-free industry to collectively welcome the move.

The Ministry stated, "We will increase the rent reduction rate for small and medium-sized enterprises and small business owners operating in airport duty-free shops from 25% to 50%, and provide a 20% rent reduction for large and medium-sized enterprises for up to six months."

In response, a representative from a large enterprise duty-free shop said, "From April 1st, a two-week quarantine measure was imposed on all arrivals, and since daigong (itinerant traders) could not enter, it was expected that duty-free shop sales in April would drop to zero, putting the industry on high alert," adding, "For the duty-free industry pushed to the brink, this government measure has provided some relief."

Another duty-free shop official said, "It is fortunate that the government understood the reality of the duty-free industry and broke down the rent barrier," but added, "Despite the rent reduction measures, the situation remains very difficult, and we hope for additional reductions."

The official also appealed, "Last month's sales plummeted by 95% compared to the same period last year, with daily sales only reaching around 1.5 to 2 million KRW," and "However, the monthly rent is about 20 to 30 billion KRW, meaning we have to pay rent dozens of times higher than sales."

In fact, last month, sales at Incheon Airport duty-free shops dropped by more than 90% due to the impact of the novel coronavirus (COVID-19). However, Incheon International Airport Corporation limited rent reductions to small and medium-sized enterprises, so the monthly rent payable by the three major duty-free shops?Lotte, Shilla, and Shinsegae?amounted to 84 billion KRW.

As a result, some companies introduced various measures such as unpaid leave for employees to reduce losses, but it was pointed out that they had exceeded their limits in coping with the enormous rent and operating costs. In the case of Incheon Airport, the recent government measure will allow large and medium-sized enterprise duty-free shops to receive rent benefits of up to approximately 100 billion KRW over six months, which is expected to provide some relief.

Regarding this, a duty-free industry official said, "Although it is somewhat late, we are grateful that the government now understands the difficulties faced by the duty-free industry," and added, "The industry will also do its best to overcome the crisis."

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