"Association Silent on SME Duty-Free Shops' Request for Support of Indojang Operating Expenses"

Duty-Free Shop Conflict Spreading from SMEs to Large Corporations

On the 18th, the arrival hall of Terminal 1 at Incheon International Airport is deserted due to the impact of the novel coronavirus disease (COVID-19). Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Lim Hye-sun] Small and medium-sized duty-free operators, whose sales have plummeted due to the impact of the novel coronavirus infection (COVID-19), formally requested the Korea Duty Free Association to support airport delivery counter operating costs. However, it is known that large duty-free operators are opposing support for the delivery counters, causing conflicts between the airport corporation and duty-free shops to escalate into a conflict between large and small businesses.

According to the duty-free industry on the 24th, the Small and Medium Duty-Free Shop Federation recently sent an official letter to the Korea Duty Free Association requesting support using the win-win cooperation fund for small and medium duty-free shops. The federation, which includes members such as Grand Duty Free, Entas Duty Free, SM Duty Free, and Jinsan Duty Free, expressed management difficulties through the official letter titled "Request for Support of Delivery Counter Operating Costs for Small and Medium Duty-Free Shops to Overcome the COVID-19 Crisis." The federation explained, "An unprecedented management crisis in the duty-free industry continues due to the prolonged COVID-19 situation," and "small and medium duty-free shops have outstanding payments related to the association's delivery counter usage."

Travelers who purchase duty-free goods at downtown duty-free shops and online duty-free shops receive their items at airport delivery counters. Under current law, duty-free operators cannot directly operate delivery counters within airports. The association leases space from the airport corporation to operate the delivery counters. The rent is collected from duty-free operators by the association and paid to the airport corporation. This is why small and medium duty-free shops requested help from the Duty Free Association, not the airport corporation. Since the COVID-19 outbreak, airport users have sharply decreased, and the monthly sales of small and medium duty-free shops have dropped by 99% compared to January this year. Among small and medium duty-free shops, the largest, SM Duty Free, withdrew from Incheon Airport Terminal 1 last month.

Small and medium duty-free shops are demanding support for delivery counter operating costs through the "win-win cooperation fund." Large duty-free shops established a win-win cooperation fund worth 10 billion KRW in 2015 to support small and medium enterprises. The fund is managed by the Korea Duty Free Association. At the time of establishing the fund, there was a plan to build an integrated logistics warehouse exclusively for small and medium duty-free shops and install an integrated delivery counter. However, last year, 4 billion KRW of the fund was invested in the export delivery counter mainly occupied by large duty-free shops. A representative of a small and medium duty-free shop said, "The win-win cooperation fund was created to support small and medium enterprises, but in reality, almost none of the funds have been used for us so far."

Regarding the request from small and medium duty-free shops, the Duty Free Association responded that it is "under internal review." A representative of a small and medium duty-free shop expressed regret, saying, "Since sending the official letter, we have only heard that large duty-free shops oppose support for the delivery counters," and added, "Isn't supporting the necessary parts for small and medium duty-free shops in line with the purpose of win-win cooperation?"

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