Lotte Duty Free Protects Gimpo After Gimhae... Now Eyes on Incheon

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 Ho-nam munonam@

[Asia Economy Reporter Yuri Kim] Lotte Duty Free has succeeded in retaining its existing operating rights in the Gimpo International Airport duty-free shop bidding, following Gimhae International Airport. The duty-free industry's attention is now focused on the expected bidding for Incheon International Airport duty-free shops next year.

According to Korea Airports Corporation and the duty-free industry on the 29th, Lotte Duty Free was selected as the final candidate for the Gimpo Airport departure hall duty-free shop (DF1) license operator yesterday. Lotte Duty Free also succeeded in the bidding for the Gimhae Airport departure hall duty-free shop (DF1) held on the 14th. As the existing operator of these duty-free shops, Lotte Duty Free will continue to operate the two duty-free shops with an expected annual sales of 71.4 billion KRW and 122.7 billion KRW, respectively. The operating rights are granted for five years from 2022 (with an option to extend for an additional five years).

The duty-free industry's attention has now turned to the Incheon Airport duty-free shop bidding. In the duty-free market, where economies of scale are crucial, the symbolism of duty-free shops in global international airports is significant. It not only increases sales volume but also highlights the position of the business operator. For these reasons, all of the 'Big 4' major duty-free companies are highly interested. Hyundai Department Store Duty Free, which did not participate in the Gimpo and Gimhae Airport bidding, has also announced that it will actively consider participating in the expected Incheon Airport duty-free shop bidding next year.

The key issue is the bidding conditions. The success of the Gimpo and Gimhae Airport duty-free shop bidding was largely influenced by the rent being linked to sales through a revenue-based rent system. Under this structure, duty-free operators can bear less burden even if sales sharply decline due to external factors such as COVID-19. Until now, Incheon Airport has chosen a fixed rent unrelated to the operator's sales during bidding. Under this structure, the fixed rent must be paid regardless of sales fluctuations. Due to this burden, the Incheon International Airport Terminal 1 duty-free shop bidding was canceled three times last year. A duty-free industry official said, "The business environment has changed significantly due to COVID-19," and added, "Since the bidding was canceled three times last year, we hope the rent conditions will be realistically changed."

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