SOUTH KOREA REPORT: KOREA AIRPORTS CORPORATION
KAC surveys fresh DF concession terms on country’s ‘hopeful’ rebound
Korea Airports Corporation (KAC) is assessing results from its new airport duty free concession revenue sharing contract set-up, as international passenger numbers and duty free sales display show promising signs of revival. David Hayes reports.
Busan Gimhae, Jeju, Daegu, Chongju, Muan, Yangyang, Pohang and Sacheon. However, the anticipated single-
Above: Gimpo International Airport suffered falls in Chinese PAX, but other non-serving Chinese routes fared better.
M
any South Korean airport duty free operators are continuing to suffer from
decreased sales caused by falling Chinese visitors. This owes much to China’s ban on
group tours in early 2017 in retaliation to the stationing of the THAAD anti- missile system. As TRBusiness went to press, City
Plus revealed it was terminating its duty free concession at Seoul Gimpo International Airport [turn to page 124], owned by state-run Korea Airports Corporation (KAC). “We terminated the contract
with City Plus due to the concession payment being overdue,” Kim Su Min, Commercial Facilities Team Assistant Manager, KAC tells TRBusiness. “The retail operation terminated on April 21, 2018.”
KAC is expecting a small increase in international passenger numbers and duty free sales this year at its nine airports offering international flights.
TRBusiness 112 TRBUSINESS
“We are discussing about a new operator with [the] Korea Customs Service,” comments Kim. “This is a different situation to
Hanwha Duty Free in Jeju Airport who terminated their contract without default.” City Plus sales fell by 7.2% to $46m
at Gimpo Airport in 2017, while international passenger numbers at the airport dropped by 4.9% to five million. Lotte Duty Free, which operates
Gimpo’s beauty concession, was less affected and its sales remained unchanged at $59m last year. “Chinese passengers were
down but other passengers were OK as Gimpo to Japan routes did not change,” explains Kim. “The THAAD crisis did not affect business travellers, it only affected group tours.”
DF sales down -2.8% KAC is expecting a small increase in international passenger numbers and duty free sales this year at its nine airports offering international flights, according to Kim. The nine airports are: Seoul Gimpo,
digit increase in pax and duty free revenue will begin to reverse last year’s overall drop in international pax and duty free sales at KAC’s airports. The decrease was caused by a fall in Chinese passengers using KAC’s airports due to the aforementioned impact of THAAD on group tours. KAC airports more reliant on Chinese passengers were more severely affected in 2017 in terms of overall passenger traffic and duty free sales than others serving a higher proportion of South Korean travellers, who actually increased in number. The nine airports offering
international flights handled a total of 15.98m passengers in 2017 – a decrease of -2.2% year-on-year. Duty free sales across KAC’s nine
airports totalled $836m in 2017 – down -2.8% year-on-year. This figure includes revenue from
the Jeju Development Council (JDC) domestic duty free shop in Jeju Airport’s domestic terminal, which serves residents of South Korea. This totalled $496m in 2017, up
1.2% compared with sales results the previous year. If JDC sales are discounted,
duty free sales at KAC airports in 2017 to outbound passengers on international flights totalled $340m, down around 3.5% year-on-year. “KAC’s international passenger
numbers were down -2.2% in total in 2017, but Jeju Airport’s total was down by 53.4% to 1.3 million international passengers as it was affected by the THAAD dispute,” comments Kim. “Cheongju Airport was down
even more in passenger numbers, with a 69.7% reduction to 186,000
MAY 2018
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