SOUTH KOREA REPORT: KOREA AIRPORTS CORPORATION (KAC)
defence system – banning mainland tour companies from sending tourists to South Korea – has raised uncertainty over actual Chinese visitor arrivals this year. Despite its concerns about
May 2017 20
YEARS 1997-2017
Heinemann hits $4bn in group turnover in 2016
Gimpo Airport recorded total duty free sales worth about US$100m in 2016.
Fighting talk from TFWA President
airport’s public interface. “Our strategy also includes the
renovation of our websites – at the moment they only show the airport’s location information and contact telephone numbers,” Kim said. “We are thinking about providing
more duty free shopping information including details about different brands and sales promotions. This
Also inside
“Downtown duty free shop sales increase each year and we think the base rate for pick up counter rental should increase, but we have a fixed rate; that’s our problem.”
Gimhae and Jeju operations at a glance
Busan Gimhae Airport is KAC’s busiest airport handling 7.7m arriving and departing international passengers in 2016, up 30.5% compared with the previous year. Duty free revenue at Gimhae totalled
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Kim Su Min, Assistant Manager, Commercial Facilities Team, Korea Airports Corporation
reprisal against the South Korean government’s decision to install the United States’ THAAD missile
about $140m last year with South Korean travellers accounting for about 75% of duty free sales while foreign passengers, (mainly Japanese and Chinese visitors) accounted for the remaining share. Sales were divided equally between
the perfume, cosmetics and general merchandise concession – now held by Lotte Duty Free after Shinsegae Duty Free relinquished the original license – and the liquor, tobacco and
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general merchandise concession held by DufryThomasJulie. Jeju International Airport is KAC’s
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other major airport, which served 2.7m international arriving and parting passengers in 2016, up 37.5% compared to the previous year. JDC’s domestic duty free shop is KAC’s
largest airport duty free store covering 3,020sq m in Jeju Airport’s domestic terminal. Sales in 2016 were worth US$458m, up 8% compared with revenue the previous year. Galleria Duty Free, part of the Hanwha
Galleria retail group holds the concession for Jeju Airport international terminal. The company’s 410sq m duty free shop
Jeju International Airport recorded the highest duty free sales of all Korea Airport Corporation's airports in 2015.
MAY 2017
recorded sales worth $60min 2016, registering a 12.5% increase over the previous year. More than 90% of purchases in Jeju
Airport’s international terminal are made by Chinese visitors.
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year we are doing a focus group survey to better understand our duty free customers. “Usually we just have regular
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passenger questionnaires, so it is the first time for us to do focus groups on all our international airports.” KAC owns and operates all of
LAGARDÈRE IN ROME | ACI CONFERENCES’ REVIEW | LOTTE DUTY FREE | DFS GROUP SHILLA | SUNRISE | EVER RICH | CHANGI AIRPORT | SINGAPORE CRUISE CENTRE | CHINA DUTY FREE | INCHEON AIRPORT | HDC SHILLA | HANWHA GALLERIA | SM DUTY FREE WILLIAM GRANT & SONS | PERNOD RICARD | BROWN-FORMAN | BEAM SUNTORY | BACARDI BEAUTY IN ASIA REPORT | COTY’S PHILIPPE MARGUERITTE | PEOPLE NEWS | NOW & THEN
South Korea’s international airports with the exception of Incheon International Airport. The state-run organisation has
recently seen strong growth in international passenger traffic at most of its airports, particularly in Chinese visitors, while the number of direct international flights serving its various airports has risen each year. However, China’s
recent
how the issue will be resolved, KAC forges ahead with its review which will involve Samil PWC reviewing the airports’ commercial contracts, including its duty free license fee structure.
Lessons learned at Incheon? Interestingly, this consultancy played an advisory role to Incheon International Airport Corporation in planning its current duty free concession license fee structure. It is no surprise that KAC is focusing
keenly on improvements in this arena, as it freely admits that duty free concession fees have become one of KAC’s most important non- aeronautical sources of income. Non-aviation revenue, mostly
duty free, restaurant and airport parking concession fees already account for 70% of the corporation’s total revenue. Duty free license fees alone represent a 75% share of overall concession fee revenue. Aviation revenue, which is
mostly aircraft landing fees and aircraft departure fees, accounts for the remaining 30% share of KAC’s total revenue. “Every operator has a five-year
license contract now except for Jeju development Corporation (JDC)
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