SOUTH KOREA: KOREA AIRPORTS CORPORATION (KAC)


passengers in 2019. Though it be smaller, Muan


Airport appears to have caught CityPlus’ attention recently, as KAC plans to close nearby Gwangju domestic airport and transfer flights to Muan. TRBusiness understands that


Gwangju Airport’s passenger traffic has been negatively affected by competition from KTX high speed rail services and national express bus services to Seoul.


“Sales at duty free shops are expected to decline in 2020 from a year earlier. But the method of charging rent is expected to ease operators’ economic difficulties as the shop rent fees are dependent on sales.”


Kwon Seung Joo, Korea Airports Corporation (KAC)


Above: Entas operates this liquor and tobacco store at Incheon International Airport.


Lotte Duty Free, which holds Gimhae’s perfume, cosmetics and general merchandise license registered the largest growth in 2019. Dufry, through its Dufry Thomas


Julie Korea Co joint venture, holds the Gimhae liquor and tobacco concession. Muan Airport, located on the


Korean peninsula’s southwest tip, is a smaller airport, which handled 687,000 international


Boost to Muan traffic As Muan and Gwangju airports are only 45 minutes apart (by car), KAC has decided to move flights from Gwangju Airport to Muan, which will also benefit from government support in promoting economic development in the surrounding area. Transferring Gwangju’s flight


schedule to Muan Airport will boost Muan’s total domestic and international passenger numbers to about 3m a year. Muan already boasts a new


passenger terminal which KAC now plans to extend. Expanding the departure duty free shop will also be a possibility as passenger numbers increase. Total international passenger


numbers at all KAC’s airports rose 8.5% to reach 20.3m in 2019, up from 18.7m passengers in 2018. Jeju, Daegu, Cheongju and Muan


airports saw the largest increases in international passenger numbers,


South Korean visitors to Jeju continue to dwindle


KAC’s total airport duty free sales include revenue from the Jeju Development Council (JDC) domestic duty free shop in Jeju Airport’s domestic terminal, which serves residents of South Korea. JDC’s domestic duty free sales have


seen a decrease in two consecutive years as more South Koreans continue to travel overseas on vacations and fewer visiting Jeju as a result. South Korean residents visiting Jeju


from elsewhere in the country are entitled to a US$600 duty free shopping allowance each visit and up to a maximum of six visits a year. Jeju Airport is South Korea’s second


72 TRBUSINESS


busiest airport after Incheon Airport and South Koreans taking domestic flights account for more than 90% of its total passenger traffic. Few South Koreans choose to fly


overseas directly from Jeju Airport. Most passengers taking international


flights are Chinese visitors who accounted for over 90% of the 2.6m international passengers using Jeju Airport last year. Duty free sales to international


passengers departing Jeju Airport have been slow to develop as most Chinese visitors buy goods in Jeju’s downtown duty free stores rather than wait to shop


Mixed category shops at Jeju Airport were closed in March.


MAY 2020


in the airport’s single mixed category store which Shilla Duty Free operates.


while traffic was stagnant at Seoul Gimpo Airport and fell about 2.5% at Gimhae Airport. Total duty free sales at all KAC’s


international airports reached US$753m/KRW 880bn in 2019, up 1.5% year-on-year. However, sales predictions


for 2020 are understandably much gloomier. Sales have already been severely impacted by the Covid-19 crisis due to widespread international flight cancellations and plummeting passenger numbers which have caused some duty free outlets to close. “Sales at duty free shops are


expected to decline in 2020 from a year earlier,” said Joo. “But the method of charging


rent is expected to ease operators’ economic difficulties as the shop rent fees are dependent on sales.” Shilla Duty Free’s Jeju International


Airport mixed category duty free shop has been closed since 14 March, due to almost all scheduled international flight services to Jeju being suspended. It’s the same story for KAC’s


second largest airport, Gimpo – which recorded 4.3m international passengers in 2019 – where Lotte and Shilla have closed their duty free shops temporarily to reduce costs. Lotte Duty Free holds Gimpo


Airport’s perfume, cosmetics and general goods license, while Shilla Duty Free operates Gimpo’s liquor and tobacco concession. «


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