Participation of 'Big 3' in Gimhae Airport Duty-Free Store Bid... Priority Negotiation Candidate Outline Next Week

Ahead of the Chuseok holiday, the spread of COVID-19 is accelerating mainly in Seoul and the metropolitan area. On the 16th, the domestic terminal of Gimpo Airport in Gangseo-gu, Seoul, was crowded with passengers. Photo by Mun Honam munonam@

[Asia Economy Reporter Yuri Kim] With the participation of the 'Big 3' major duty-free operators?Lotte, Shilla, and Shinsegae Duty Free?in the bidding for Gimhae International Airport duty-free store, full-scale competition has begun. The preferred negotiation candidate is expected to emerge as early as next week after the evaluation of bid proposals and price opening.

According to Korea Airports Corporation on the 8th, Lotte, Shilla, and Shinsegae Duty Free participated in the bidding for the operator of the duty-free store (DF1) located on the 2nd floor international departure hall of Gimhae Airport, which closed this afternoon. Hyundai Department Store Duty Free, which attended the on-site briefing session earlier last month, withdrew from the final bidding.

The store covers an area of 991.48㎡ and sells perfumes, cosmetics, and other items excluding liquor and tobacco. The lease period is 5 years from the start date of the license, with the possibility of extension up to 10 years. The expected annual sales amount is 122.7 billion KRW.

Despite the ongoing COVID-19 situation, the participation of three major duty-free operators is due to the application of a sales-linked rent system, which reduces cost burdens, and the need to plan for post-COVID business prospects. Unlike the 'fixed rent' method, the 'sales-linked' method is applied, so even if sales decline due to COVID-19 impacts, the cost burden is low. The lease term of '5 years + 5 years' also attracts industry interest in this bidding. With the possibility of operating up to 10 years, it is impossible not to consider future value such as the tourism boom after COVID-19.

Given the nature of the duty-free business, realizing 'economies of scale' is also an indispensable factor. The larger the duty-free store in terms of number of stores, handled items, and quantities, the greater the 'buying power,' allowing procurement under favorable conditions.

Lotte Duty Free, currently operating this area, expressed strong determination to retain the store even before the bidding. Shilla Duty Free also showed interest by forming a related task force (TF). A Shilla Duty Free official said, "We participated in the bidding after appropriate analysis of the current situation." Shinsegae Duty Free also joined the final bidding after careful consideration. A company representative explained, "It shows our commitment to the duty-free business."

However, the industry expects that the business environment in the post-COVID era will not be the same as before, and it is known that they deliberated until the last moment on the operating rate. The minimum operating rate that can be submitted is 30%. However, when deciding the successful bidder, the evaluation of the proposal (60%) carries a greater weight. Only companies scoring at least 85% of the maximum proposal score (100 points) have their bid operating rates opened, and the preferred licensee candidate is selected based on the combined high scores of the proposal evaluation and bid operating rate scores. An industry insider said, "The proposal evaluation also carried significant weight, so we put effort into it," adding, "Regarding the operating rate, there was no atmosphere of reckless betting as in the past."

The selection of the preferred negotiation candidate through proposal evaluation and price opening is expected to take place as early as next week. The final operator will be decided after customs license review and other procedures.

Meanwhile, the bidding for Gimpo International Airport duty-free store will close on the 26th. At the earlier briefing session for the Gimpo Airport 3rd floor departure hall duty-free store (DF1) bidding, representatives from the four major duty-free operators?Lotte, Shilla, Shinsegae Duty Free, and Hyundai Department Store Duty Free?all attended. The DF1 subject to bidding covers an area of 732.2㎡ and sells cosmetics, perfumes, and other items. The expected annual sales amount is approximately 71.4 billion KRW.

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