Incheon Airport Duty-Free Business License Bidding Heats Up: "Capital Power of China VS Operational Experience of Korea"

Announcement of Duty-Free Business License Bidding on the 14th
Multiple Operators to Be Selected After Bid Opening on the 16th or Later

On the 22nd, when the number of daily passengers at Incheon Airport exceeded 120,000 for the first time since the COVID-19 pandemic, the duty-free area of Terminal 1 at Incheon Airport was crowded with travelers.
Yeongjongdo - Photo by Kang Jinhyung aymsdream@

The bidding competition for the new duty-free business rights at Incheon International Airport is intensifying, starting with the bid presentation (PT). While China Duty Free Group (CDFG), a Chinese state-owned duty-free group, has entered the domestic market leveraging its financial power, the domestic 'Big 4' duty-free operators?Lotte, Shilla, Shinsegae, and Hyundai Department Store Duty Free?are strategizing to defend their positions by emphasizing their operational capabilities.

According to the duty-free industry on the 14th, Incheon International Airport Corporation will conduct the PT evaluations for the duty-free business rights at Terminal 1 (T1) and Terminal 2 (T2) over two days starting today.

The bidding targets 24,172㎡, which is 90% of the total operating area (26,742㎡) of Incheon Airport. From today, proposal presentations will be held for the large enterprise business rights (DF zones 1 to 5) involving CDFG and four domestic companies, followed by PTs for small and medium-sized enterprise business rights (DF zones 8 to 9) candidates on the 15th.

The evaluation for the duty-free business rights will combine the business proposal evaluation score (60 points) and price evaluation score (40 points) submitted by bidders. Multiple qualified operators will be selected in order of high scores and notified to the Korea Customs Service, which will conduct further review and decide the final winner next month.

Since the business rights are valid for the next 10 years, CEOs of each company will personally present their competitiveness and business plans. Kim Joo-nam, CEO of Lotte Duty Free; Yoo Shin-yeol, CEO of Shinsegae DF; and Lee Ju-sil, CEO of Hyundai Department Store Duty Free will conduct their own PTs, while Shilla Duty Free will be represented by Vice President Kim Tae-ho, head of the duty-free business (TR) division.

The most attention in this evaluation is on CDFG. Given its strong Chinese financial backing, it is expected to gain an advantage over domestic companies by proposing higher rental fees. CDFG, which recorded approximately 10 trillion KRW in sales and over 1 trillion KRW in operating profit last year, is known to have recruited numerous former executives from Incheon Airport Corporation and officials from the Korea Customs Service to devise various strategies for securing the business rights.

On the other hand, domestic companies, which have suffered long-term financial difficulties during the COVID-19 pandemic, are at a disadvantage in terms of capital. However, they plan to leverage their infrastructure such as logistics and online services, experience in attracting major luxury brands, brand competitiveness, and over 40 years of operational expertise and customer service to compete.

The bidding includes a total of seven business rights: five general business rights (63 stores, 20,842㎡) and two small and medium-sized enterprise business rights (14 stores, 3,280㎡). The previous 15 business rights, which were divided by terminal, have been consolidated and adjusted to ensure stable operation of business rights even if airlines are reassigned between terminals following mergers of national airlines. The general business rights are divided into two for perfumes, cosmetics, liquor, and tobacco (DF1 and DF2), two for fashion, accessories, and boutiques (DF3 and DF4), and one boutique-only (DF5).

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