High Expectations Dashed... Duty-Free Industry Disappointed by Poor Performance of Non-Stop International Tourism Flights

Minimal Increase in Duty-Free Sales
Poor Sales in Entry/Exit Areas and In-Flight Duty-Free
Flight Occupancy Rate Only 35-36%
Flight Cancellations Amid Social Distancing Tightening

[Image source=Yonhap News]

[Asia Economy Reporter Cha Min-young] The duty-free sales during the first weekend of the non-landing international sightseeing flights, a joint project by the government and the travel, aviation, and duty-free industries, fell short of expectations.

According to the duty-free industry on the 15th, the overall duty-free sales increase, including the three major duty-free corporations (Lotte, Shilla, Shinsegae), was minimal following the first non-landing international sightseeing flight on the 12th. The expected sales at the arrival and departure duty-free shops remained unchanged, and the in-flight duty-free shops, which faced difficulties in obtaining approval, generated almost no sales. Slight sales occurred mainly at online duty-free shops and downtown duty-free shops, but only Shinsegae Duty Free, which partnered with Jeju Air for a large-scale promotion, saw an increase in domestic sales.

The main reason the duty-free industry received a disappointing report card was that the prerequisite?sales of tourism products?performed worse than expected. According to the Ministry of Land, Infrastructure and Transport’s Aviation Information Portal System, the number of passengers on the non-landing overseas sightseeing flights on the 12th was 169 for Asiana Airlines and 62 for Jeju Air. The seating capacities were 471 and 171 respectively, resulting in actual load factors of about one-third, 35.9% and 36.3%.

The international sightseeing flight products retained the existing duty-free allowance of $600 and duty-free benefits on alcohol and tobacco for international passengers, which spread by word of mouth among consumers. Since February this year, as duty-free inventory accumulated, discount benefits increased significantly: cosmetics 20?50%, accessories 20?70%, fashion and eyewear 20?50%, and health supplements 30?60%. However, considering the flight product price of 200,000 to 250,000 KRW, it was difficult to realize the effect of duty-free shopping, so it appears to have been just a simple topic of interest. Additionally, with social distancing raised to level 2.5, Air Seoul canceled its scheduled non-landing overseas sightseeing flights on the 19th and 26th among the six national carriers included in the first flight schedule announced by the Ministry of Land, Infrastructure and Transport. The flight on January 1 will be decided after monitoring the situation. Asiana Airlines is also reported to have canceled some scheduled flights.

A duty-free shop official said, "Traffic on internet duty-free shops and mobile applications has increased significantly, showing growing interest from domestic customers, but the actual sales increase is not very large," adding, "The resurgence of COVID-19 and flight cancellations seem to have negatively affected consumer sentiment."

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