TOP 10 AIRPORTS: INCHEON 1 Q


Incheon takes the crown for fourth consecutive year


DF&TR sales of $2.43bn in 2019 cement Incheon International Airport’s leading position in the TRBusiness Top 10 Airport rankings. But as Luke Barras-Hill writes, this result has been unmercifully overshadowed by disruption to the Terminal 1 tender and protracted rent relief discussions catalysed by the coronavirus.


uite how the collapse in international air travel will influence TRBusiness’ 2021 leader board of airports


based on their duty free and travel retail sales is entirely unknown at this point. But changes (with some exceptions) are highly likely. Incheon International Airport


had already weathered sustained THAAD-related pressures on Chinese arrivals traffic in 2017/2018 before coronavirus (Covid-19) inflicted grievous harm on passenger numbers this year. This veritable doomsday scenario


has left global airports staring at a revenue black hole estimated at more than $97 billion this year, according to ACI World. For Incheon, DF&TR sales rose


by 2.7% in 2019 year-on-year to reach $2.43bn. Operator Incheon International


Airport Corporation (IIAC) attributed the ‘outstanding performance’ to several variables: increased passenger traffic [departing international volumes grew by 4.5% to reach approximately 70 million – Ed]; renovations at several departure duty free shops; and the successful opening of South Korea’s first arrivals duty free shops. It is worth noting though that


growth of +2.7% is certainly more muted compared with previous years, with IIAC putting much of this down to currency-related losses in the first half of 2019. Cosmetics and perfumes took the


lion’s share of sales (41%) at $985m, followed by liquor and tobacco (23%) at US$542m. In a statement, IIAC pointed to


the increased competitiveness and ‘diversity’ of its arrivals duty free shops and the expectation for higher


AUGUST 2020


income linked to revised customs regulations permitting tobacco sales. The decision by the South Korean


government to lift the departure duty free purchase allowance ceiling for Koreans from $3,000 to $5,000 in September 2019 enabling customers to buy $5,600 worth of goods (including the $600 arrivals purchase limit), won’t have hurt either.


New arrivals business Speaking to this publication during a trip to South Korea in December, when a new, mysterious virus was circulating in Wuhan, China, IIAC Director/Duty Free Management Team Sung-Bin Im spoke about the new arrivals shops, which were secured by SM Duty Free and Entas Duty Free under five-year contracts in May 2019. During an interview, Im revealed


to TRBusiness a plan to add an extra 3,000sq m of shopping space at Terminal 2. IIAC also intends to introduce further arrivals duty free shops. Both developments are meant


to commence from 2023 once the expansion programme at Terminal 2 has completed.


For the uninitiated, this encompasses a four phase circa KRW4.8tn construction project designed to lift passenger capacity to approximately 100 million by 2024. Lotte Duty Free, Shinsegae Duty


Free and The Shilla Duty Free already boast a strong presence at Terminal 2, which opened in 2018. Equally, all three retain footprints


at Terminal 1 and this has grabbed the headlines in 2020 for a combination of reasons – not all positive. In January, IIAC ended the wait on


its highly prized Terminal 1 duty free tender by releasing the RFP. As expected, a total of eight


proposed airside packages (five general enterprise; three small and medium-sized enterprises) spanning a total of 40 shops over an initial 8,628sq m of retail concession space were put on the table. According to the RFP document, this would increase to 50 shops and


Cosmetics and perfumes took the lion’s share of sales (41%) at $985m, followed by liquor and tobacco (23%) at US$542m.


TRBusiness TRBUSINESS 23


Above: City Duty Free retains a foothold at Terminal 1 after swooping for one of the SME lots. But SM Duty Free (not pictured) will vacate its departures T1 store.


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