Incheon Airport Corporation Announces Bidding for New Duty-Free Operator Selection

[Asia Economy Reporter Hyunseok Yoo] Incheon International Airport Corporation announced on the 30th that it will hold a bidding announcement to select operators for the duty-free business rights at Terminal 1, Concourse, and Terminal 2.

This bidding is taking place amid unprecedented uncertainties such as COVID-19, the fourth phase of construction, the merger of national airlines and airline reallocation issues, deterioration of the duty-free business environment, and regulatory changes. Accordingly, the corporation has established bidding conditions focusing on resolving uncertainties for participating duty-free operators.

The bidding rights consist of a total of seven licenses: five general licenses and two small and medium-sized enterprise licenses. The total of 15 licenses previously divided by terminal have been significantly consolidated and adjusted. This allows for stable operation of business rights even amid various uncertain environments such as airline reallocation between terminals following the merger of national airlines.

First, perfume and cosmetics items, which have weakened price competitiveness compared to other distribution channels such as open markets, and steady sellers like liquor and tobacco items have been combined to enable complementary operation of business rights. The fashion, accessories, and boutique sectors, whose sales proportions have steadily increased since COVID-19, are composed of three licenses: two for fashion, accessories, and boutiques, and one specialized boutique license. Inefficient stores in the Concourse and Terminal 1, which have lower operator preference, have been reduced. Stores in Terminal 2, where preference is increasing, have expanded their operating area after the fourth phase of construction.

The contract period is set at a basic 10 years without options to enhance operational stability. This reflects the recent Ministry of Economy and Finance’s 2023 tax law amendment extending duty-free business license periods and the Commercial Lease Protection Act. It is expected to minimize inconvenience to airport users caused by operational gaps through a stable long-term contract.

The rental fee system, which has been maintained as a ‘fixed minimum guarantee’ since the opening of Incheon Airport, will be changed to a ‘rental fee per passenger’ system. The ‘rental fee per passenger’ method calculates rent by multiplying the number of airport passengers by the unit price per passenger proposed by the operator. This allows immediate adjustment of rent in situations where passenger numbers fluctuate sharply, such as during COVID-19, greatly alleviating operators’ concerns about operational uncertainties. Additionally, considering the sluggish duty-free business conditions, mandatory facility investments, previously required twice during the contract period, have been reduced to once, easing the investment burden on operators.

Along with this, the development of distinctive duty-free stores to provide new customer experiences for Incheon Airport users will be promoted. Plans include offering a higher level of duty-free shopping experience through personalized information provision based on the latest shopping trends using smart technology, biometric payment services, and experiential stores utilizing IT new technologies. Furthermore, a multi-level duty-free store will be introduced for the first time at Incheon Airport in the core area of Terminal 2’s east and west departure halls. By attracting a large-scale luxury boutique connecting the 3rd and 4th floors, it aims to provide airport users with a new duty-free shopping experience.

It does not stop there. A ‘Smart Duty-Free Service’ will also be introduced, allowing passengers to purchase duty-free products from the airport duty-free store via a mobile environment anytime from home until 30 minutes before boarding and conveniently pick them up at the store instead of the delivery counter. This service relaxes the purchase time restrictions (available until the day before departure or two hours before boarding) that are limitations of existing downtown and online duty-free stores.

In this bidding, the corporation will select multiple candidates for the license review and notify the Korea Customs Service. The Customs Service will select one successful bidder by reflecting 50% of the corporation’s evaluation results. The schedule proceeds with participant registration on February 21, 2023, submission of bidding proposals on February 22, followed by proposer evaluation and Customs Service license review. The final successful bidder decision and contract signing are expected to be completed by July 2023, when the new operator will commence operations.

Kim Kyung-wook, President of Incheon International Airport Corporation, said, “Considering the current rapid normalization of airport operations, we plan to proceed with the bidding quickly to avoid customer inconvenience,” and added, “By successfully carrying out this bidding in the post-COVID-19 era, we will regain competitiveness as the world’s number one airport duty-free store.”

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