SOUTH KOREA: INCHEON INTERNATIONAL AIRPORT


Incheon ushers in new arrivals shop era as attention turns to T1


Incheon International Airport Corporation is targeting double-digit duty free revenue growth in 2019 as it awards its arrival duty free shop contracts and plans a renovation programme at T1. David Hayes reports.


T


he year has started well for Incheon International Airport, with passenger


numbers and duty free shop sales displaying strong growth in Q1 as South Korean and foreign traveller numbers using low cost carrier (LCC) flights continue to rise. As reported, duty free sales


rose 15% to reach a record US$2.4bn in 2018. Broken down by category, perfume


and cosmetics is the largest revenue generator in the airport’s departure duty free shops, accounting for 40% of total sales in T1 and T2 in 2018. “The liquor and tobacco share of


sales was 23%, the same share as in 2017 but the sales value increased last year,” comments Chang-Kyu Kim, Executive Director of IIAC’s Concession Development Group.


Cosmetics drive sales Overall sales have been buoyed by a 40% increase in purchases among departing Chinese passengers following Terminal 2’s opening in January 2018. “The Chinese passenger sales increase was $230m last year, mostly


MAY 2019


cosmetics items,” says Kim. “This year we hope there will be


more than a 10% increase in total sales as the passenger forecast is an increase of about 5% in 2019. Incheon Airport served 67.7 million


arriving and departing international passengers in 2018, up 10% year-on-year. Some 22.5m were South Korean


passenger departures, up 7% compared with the previous year and outnumbering departing overseas visitors by two to one. However, departing foreign


passenger numbers rose by 15% year- on-year to 11.3m – twice the rate of departing South Korean travellers. According to the Korea Tourism


Organisation (KTO), the total number of mainland Chinese visitors to South Korea rose 19% to 3.2m in 2018 followed by Japanese visitors, which rose 31% to 1.8m. “Our LCC carrier flights and


Chinese passengers are increasing this year,” says Kim. “There was a 29% increase in Chinese passengers in January; also, a strong increase in February.” Incheon Airport’s record duty free


sales haul was achieved despite four duty free licences being terminated in T1, requiring IIAC to appoint a new operator for each. Shinsegae Duty Free successfully


bid for all three of Lotte Duty Free’s terminated T1 licences, covering perfume and cosmetics (DF1), leather goods and fashion (DF5) and exclusive concourse operator all goods (DF8). This left Lotte with just its liquor and tobacco concession in T1. In addition, Grand Duty Free, a


newcomer SME operator at Incheon Airport that operates downtown and airport duty free shops in Daegu City, was awarded the SME perfume and cosmetics licence.


“This year we hope there will be more than a 10% increase in total sales as the passenger forecast is an increase of about 5% in 2019.”


Chang-Kyu Kim, Executive Director of IIAC’s Concession Development Group


TRBUSINESS 97


Above: Incheon International Airport served 67.7m arriving and departing international passengers in 2018.


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