Despite 99% Plunge in Passenger Numbers, Additional Support 'Unclear'?Will Ministry of Land, Infrastructure and Transport's Announcement Be Delayed?

Incheon Airport Corporation Promises Additional Support to Three Major Duty-Free Companies
Rent Expected to Be Reduced by 40-50%
Promised Quick Announcement, but No News Yet

On the 18th, the arrival hall of Terminal 1 at Incheon International Airport was deserted due to the impact of the novel coronavirus disease (COVID-19), as the aviation industry, hit hard by COVID-19, faces a wave of layoffs. Photo by Mun Honam munonam@

[Asia Economy Reporter Lim Hye-sun] Incheon International Airport Corporation, which promised additional support to the three major duty-free companies, remains silent. On the 15th, Koo Bon-hwan, president of Incheon International Airport Corporation, pledged to the duty-free store representatives, who are facing the worst crisis due to the COVID-19 pandemic, that an expanded rent reduction policy would be announced soon. However, even after a week, there has been no news. There are even reports that the Ministry of Land, Infrastructure and Transport, the higher authority, is "withholding the final decision," leading to criticism that the difficulties of the duty-free industry are being ignored.

A duty-free industry official said on the 22nd, "With sales plummeting due to the decrease in travelers, we are facing the worst situation since the company's founding due to the burden of hundreds of billions of won in rent every month," adding, "We expected some relief if the government implemented additional support measures, but the atmosphere looks unfavorable." The industry anticipated that Incheon International Airport Corporation would uniformly reduce rents by 40-50%, as the corporation had shown full sympathy for the industry's difficulties during a previous meeting.

The duty-free companies operating at Incheon Airport turned to losses in the first quarter. The second quarter is expected to be even tougher. Last month, the number of international departing passengers at Incheon Airport was 32,646, a 99% drop compared to the same period last year. As a result, the sales of the three major duty-free companies at Incheon Airport were about 250 billion won in April last year, but dropped by 80% to around 50 billion won this April. The estimated monthly rent for the three major duty-free companies at Incheon Airport is 83.8 billion won: Shinsegae Duty Free pays about 36.5 billion won, Shilla Duty Free about 28 billion won, and Lotte Duty Free about 19.3 billion won. Since the three major duty-free companies at Incheon Airport have generated almost no sales since April, they are expected to incur losses exceeding 100 billion won due to rent and fixed costs (such as labor costs).

In May, the number of days with fewer than 3,000 daily users at Incheon Airport reached three, indicating a sharp decline in airport usage. According to the '3-stage emergency operation system' announced by Incheon International Airport Corporation, if the daily passenger count is between 3,000 and 7,000 (stage 2), parts of the terminal must be shut down, commercial facilities and the third runway closed, and the boarding area operations suspended. Despite the decrease in airport users, Incheon International Airport Corporation has not announced the stage 2 emergency operation system.

A duty-free industry official appealed, "The airport is almost at shutdown level with almost no users, causing rent to exceed sales," and stressed, "Effective rent reduction measures at Incheon Airport are urgently needed." Previously, the government introduced differentiated support measures for commercial facilities within Incheon International Airport. Small and medium-sized enterprises were given a 25% rent reduction for six months, while large corporations were only granted payment deferrals. After fairness concerns arose, large corporations were also given a 20% rent reduction, but with a clause requiring them to forgo support next year. There is a strong call for additional support measures that realistically reflect the situation for both the large and small duty-free companies on the brink of collapse.

Regarding this, a Ministry of Land, Infrastructure and Transport official explained, "We are fully considering the difficulties faced by duty-free stores and are discussing additional support plans," adding, "We plan to announce them by the end of this month or early next month." Incheon International Airport Corporation intends to announce additional support measures once consultations with the Ministry are completed.

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