SOUTH KOREA: KOREA AIRPORTS CORPORATION


Interestingly, it was Jeju Airport’s performance which had a negative impact on KAC’s total duty free sales, with the Jeju Development Council (JDC) registering a decline of -2.5% last year.


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Daegu serve larger numbers of South Korean passengers than Gimpo and Koreans are expected to be the largest customer group using KAC’s new arrivals shops. “We expect most arrivals


Dufry Thomas Julie joint venture store at Busan International Airport.


free operator, Shilla Duty Free bid successfully to take over Cityplus’ terminated concession and then spent the next three months renovating its two Gimpo Airport shops which finally opened in January this year. In spite of the strong increase in


international passenger traffic last year, duty free sales in KAC’s nine airports – which include Busan Gimhae, Jeju, Daegu and Gimpo – grew in single digits over the previous year, totalling about US$760m in 2018. Interestingly, it was Jeju Airport’s


performance which had a negative impact on KAC’s total duty free sales, with the Jeju Development Council (JDC) registering a decline of -2.5% last year. Jeju Airport is South Korea’s


second busiest airport after Incheon Airport with some 29.4m passengers recorded in 2018, of which 27.5m were domestic. South Korean residents visiting


Jeju from elsewhere in the country are entitled to a US$600 duty free shopping allowance each visit, up to a maximum of six visits a year. Sales at Jeju Airport’s duty free


shop in the domestic terminal reached $483m in 2018. “Jeju’s domestic passenger


numbers decreased because more South Koreans are travelling abroad for vacations,” explains Kim. Few South Koreans fly overseas


directly from Jeju, but Chinese passengers accounted for 94% of the 1.9m international passengers it


MAY 2019


served last year. The number represented a


49% increase over 2017, when Chinese arrivals plummeted as the THAAD missile crisis impacted South Korean tourism. However, Kim says she expects


sales at Jeju to creep up again this year, following Shilla Duty Free’s takeover of the airport’s sole mixed category international terminal duty free shop from Hanwha Galleria Duty Free in March 2018. Shilla reportedly registered sales of about $25m after renovating the store. “We expect a little increase in


total duty free sales this year as we have some new operators,” confirms Kim. “We [also] expect Gimpo’s duty


free sales to increase as Shilla Duty Free started in January this year selling liquor, tobacco and fashion. “Also, sales should increase at


Cheongju Airport where Tu Jae Duty Free is the new operator.”


Constraints on arrivals KAC is reluctant to offer an arrivals sales forecast for Gimpo Airport at this point [as mentioned, negotiations for arrivals shops are still ongoing]. However, it is interesting to


learn that, if Gimpo was to open an arrivals store it might not be the most successful. In fact, the authority believes that


several of its regional airports have the potential to generate higher duty free arrival sales than Gimpo Airport in future. Airports such as Gimhae and


customers will be South Korean as foreign visitors can buy these items at cheap prices downtown.” What Kim also emphasises is the


constraints on the size of these new shops, due to the large baggage hall space. “Jeju Airport’s duty free arrival


shop would probably be about 100sq m,” reveals Kim. “Maybe we can do Gimhae


Airport’s arrivals shop next year. We do not have much space there, so the arrivals shop would be less than 100sq m. “Duty free arrival shops in our


Cheongju, Muan and Yang Yang international airports will all be less than 80 sq m.” «


Gimhae Airport: Profile


Gimhae Airport generates the highest duty free revenue among KAC airports after Jeju Airport, posting total sales of $185m in 2018. Dufry, through its Dufry Thomas Julie Korea


Co joint venture, recently renewed its Gimhae liquor and tobacco concession in February 2019, registering sales of $77m at the airport in 2018. Lotte Duty Free, Gimhae’s other concessionaire,


which holds the perfume, cosmetics and general merchandise license registered sales of $108m last year.


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