SOUTH KOREA: INCHEON INTERNATIONAL AIRPORT
“We have a plan to renew and renovate the T1 concourse, so we expect higher sales there next year.”
Chang-Kyu Kim, Executive Director of IIAC’s Concession Development Group
total duty free arrival sales in the first year,” says Kim, adding that first year T1 arrival shop sales are likely to be double those recorded in T2. “We hope for more sales, but
we are not sure as it’s the first time airport arrival shops open in South Korea. “We predict the South Korean
That was previously operated by Samick Duty Free, which decided to leave airport retailing to focus on its non-duty free core business. Meanwhile, SME duty free
operations at Incheon Airport are due to increase after IIAC and the Korea Customs Service recently awarded SM Duty Free and Entas Duty Free individual concessions to operate arrival duty free shops in Incheon Airport’s T1 and T2, respectively. Preparations for the T1 and T2
concessions, which run for five years plus a five year extension (10 years in total), are nearing completion. Due to open on 31 May, SM Duty
Free’s two T1 shops and Entas Duty Free’s single T2 outlet will be the first arrival duty free shops to open in Incheon Airport and the first in South Korea. Government regulations allow
the new shops to sell all product categories, except for tobacco and fresh food products. The only other restriction is that
South Korean goods should account for at least 20% of all products sold in the arrival shops. “We expect KRW100bn ($80m)
passenger share of arrival shop sales will be similar to our departure shops where about 50% of purchases are by South Korean travellers.” South Korean and international
cosmetics and imported liquor are expected to be the main items sold in the arrival shops, along with red ginseng products. “We will test for six months and
may expand after,” says Kim. “We think that four arrival duty free shops will be right for T1, and three arrival shops in T2.”
T1 Concourse renovation As expected, Incheon Airport’s T2 opening has affected duty free sales in T1 following the transfer of Korean Air and other Sky Team member airline flights from T1 to T2 for the January 2018 opening. Seven more airlines transferred
from T1 to T2 during 2018, leaving Asiana Airways along with Star Alliance and OneWorld airlines plus some other carriers in the T1 main terminal. The T1 concourse is used mostly by LCC carriers. Some 74% of departing passengers
used T1 in 2018 while 26% used T2, the ratio being reflected in the
The share of total duty free sales from tobacco and liquor was 14% and 9%, respectively, last year.
division of duty free sales between the two terminals. As such, some 71% of total duty
free spending at Incheon Airport was recorded in T1 shops and boutiques last year, while T2 outlets registered 29% of duty free sales. In T1, the low ratio of duty free sales
in the concourse shops compared to those in the main terminal building continued in 2018. Some 44% of all departing
passengers took flights from the main terminal, where airside shops recorded 64% of total duty free sales. In contrast, the T1 concourse
handled 30% of all passenger departures but the shops recorded just 7% of total duty free purchases. “We have a plan to renew and
renovate the concourse, so we expect higher sales there next year,” explains Kim. The concourse renovation scheme
is part of a complete T1 overhaul to be carried out after expiring T1 duty free concessions that end in August 2020 are tendered and the new licence holders begin operations next year. Meanwhile IIAC is monitoring
duty free sales growth in T2 to help in the design of new duty free shops when T2 is expanded in future. “T1 is crowded, so some more
airlines may move to T2,” Kim hints. “In 2024 we will expand T2; now it is 18m passengers per year capacity, in 2024 it will become 46m passengers a year. “Duty free shopping in T2 will
expand then but we have not decided yet, we are just reviewing. “T2 duty free contracts will be
Shinsegae Duty Free swooped for Lotte Duty Free’s re-tendered non-L&T Terminal 1 lots last year. 98 TRBUSINESS
tendered in 2022 and we will consider expanding the duty free stores. The current T2 contracts finish in January 2023.” «
MAY 2019
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150
