Incheon International Airport Corporation decided to levy the rent for duty-free shops located in the area based on sales, rather than per passenger, until the relocation of Asiana Airlines is completed. While the number of passengers at Incheon Airport has returned to pre-COVID-19 levels, the duty-free shops continue to face management difficulties. As a result, industry insiders interpret this as a de facto rent reduction measure.
According to the industry on the 10th, the corporation recently sent a notice to operators of duty-free shops located along passenger pathways in the Phase 4 expansion area of the second passenger terminal, stating that they would apply a sales-based rent calculation, multiplying their sales by the commercial rate, until the day before the transfer of Asiana Airlines.
Incheon Airport has recently completed its Phase 4 expansion project, which cost a total of 4.8 trillion won. The expansion includes the construction of a fourth runway, the establishment of 75 passenger and cargo berths, and the expansion of the second terminal. However, the relocation of Asiana Airlines from Terminal 1 to Terminal 2, ahead of its merger with Korean Air, has not yet been completed and is expected to take more than a year.
As a result, it is expected that the Shinsegae Duty-Free Shop, Shilla Duty-Free Shop, Gyeongbokgung Duty-Free Shop, City Plus, and Korea Small and Medium Enterprises Distribution Center located in the area will have sales-based rent applied for more than a year.
Incheon Airport is also reported to be considering a rent reduction for smart duty-free shops.
In the third quarter of this year, the number of international passengers at Incheon Airport reached 18.15 million, an increase of 17.8% compared to the same period last year (15.41 million). This is a 1.3% increase from the 17.92 million passengers in the third quarter of 2019, before COVID-19, and marks the highest quarterly performance since Incheon Airport opened in 2001. However, duty-free shop sales have yet to recover. In the third quarter, the duty-free shops operated by Shilla, Shinsegae, and Hyundai at Incheon Airport all reported operational losses. Consequently, they have felt the burden of the passenger-based rent method set by Incheon Airport.
Meanwhile, Hyundai Duty-Free Shop, which does not operate in the area, will still have to pay rent based on the passenger-based method. Some in the industry have raised concerns that this rent reduction for certain duty-free shops is unfair compared to other commercial facilities that apply the passenger-based rental method. A spokesperson for Hyundai Duty-Free Shop stated, “We plan to work closely with Incheon International Airport Corporation.”