Lotte had already emphasised directly to TRBusiness the influence THAAD had as the ‘most influential reason’ for its pullout at T1, which will formally occur on 7 July.


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February that its Incheon branches had suffered losses of KRW200bn ($188m) since 2016 and were at threat of accruing further losses of KRW1.4tn ($1.3bn) if the current contract terms [to 2020] were honoured. Having already formally applied to Incheon International


Airport Corporation for rent relief in September, it went on to file an ‘unfair trade practice report’ with South Korea’s Fair Trade Commission, accusing Incheon of creating conditions that ‘disadvantage’ the duty free operator. While stopping short of calling the withdrawal, which by


all accounts was a shock to many – not least IIAC [see page 87 for a full report], Lotte’s challenges at Incheon have been well documented. What is less clear is the longer-term rent arrangement for


other T1 operators, although rival The Shilla Duty Free last month accepted IIAC’s 27.9% rent reduction offer on the basis the current THAAD impact on Chinese arrivals numbers will look to improve in the coming months. IIAC plans to re-tender the licences, however further details


on the nature of the concession terms, including duration and whether they will be tendered separately or together, were not forthcoming at the time of press. Ultimately, the timing of the tender will rest in the hands of


the Korea Customs Service, which provides stewardship over licence issuing matters. However, TRBusiness understands in an exclusive interview


this issue [see page 95] that Lotte will ‘strongly consider’ submitting bids for the three exited concessions.


THAAD effect lingers Indeed, South Korean duty free retail operators, including Lotte, will have been encouraged by the apparent ‘cooling’ in relations between Beijing and Seoul following South Korean President Moon Jae-in’s meeting with Chinese counterpart Xi Jinping at a summit meeting in December. Talk of a ‘new era’ in China-South Korea relations


during that meeting was widely interpreted as a sign of a potential thawing over the prickly THAAD issue regarding


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High-end watch fitouts at Lotte Duty Free’s main downtown store.


MAY 2018 TRBUSINESS 41


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