Recently, as congestion at the Incheon International Airport departure area has continued, the duty-free shops there have also been suffering a chain of damages. Because the departure procedures take more than three hours, passengers are unable to properly utilize the duty-free shops and other facilities, leading to a decrease in sales.
According to reports from ChosunBiz on the 25th, it has been confirmed that sales of duty-free shops have decreased from last month to this month since the congestion at the Incheon Airport departure area became visible.
A representative from a duty-free company operating at Incheon Airport noted, “Since December of last year, as the processing times for passengers at the Incheon Airport departure area have lengthened, sales in the duty-free shops have decreased by about 20 to 30% compared to initial expectations,” adding, “Due to airport facility and process issues, customers are departing without time to shop, causing difficulties during what should be a peak season at the end and beginning of the year.”
Duty-free shops at the airport pay rent based on the number of passengers at Incheon Airport. Accordingly, during peak seasons such as summer vacations or holiday weekends, they have to pay higher rents. Currently, some of the duty-free shops located in the vacant area of the second passenger terminal, where Asiana Airlines is not positioned, are paying rent based on sales figures, while the rest of the duty-free areas pay rent proportionate to the number of passengers.
According to the Incheon International Airport Corporation, the number of passengers using Incheon Airport during the Lunar New Year holiday period from the 24th of this month to the 2nd of next month is estimated to be a total of 2,141,000. This is an increase of about 13% compared to last year's Lunar New Year holiday period.
As congestion continues in the departure area, the duty-free shops are increasingly worried about the news that the number of airport users will rise. Another duty-free company representative said, “Sales are not increasing, but as the number of passengers is rising, worries about rental fees come first,” adding, “It is literally a situation where we are losing while doing business.”
According to the industry, duty-free shop operators at Incheon Airport have requested that the Incheon International Airport Corporation formulate improvement measures as they are unable to operate normally due to airport congestion.
The duty-free industry has not yet recovered its performance since the COVID-19 pandemic. According to statistics from the Korea Duty-Free Shops Association, the total sales of duty-free shops dropped from 24.86 trillion won in 2019 to 15.5 trillion won the following year after the outbreak of the pandemic, and decreased further to 13.76 trillion won in 2023.
This trend continued last year. Hotel Shilla, which operates the Shilla Duty Free, reported sales of 3.9476 trillion won last year, a 10.6% increase from the previous year, but it posted an operating loss of 5.2 billion won due to poor performance in the duty-free institutional sector.
Competitors such as Lotte Duty Free and Shinsegae Duty Free are facing similar circumstances. Lotte Duty Free, which is undergoing voluntary retirements due to poor performance, has decided not to sell products to Chinese couriers (Daigong) to increase profitability. Shinsegae Duty Free has suspended operations at its downtown duty-free store in Busan's Centum City after 12 years to cut expenses.
A representative from one duty-free shop stated, “We had been focusing on domestic customers in response to the decline in Chinese group tourists, but the issues with airport facilities have hindered operations, leaving us in a difficult situation,” adding, “Incheon Airport needs to either normalize operations as soon as possible or consider lowering rental fees until normalization occurs.”
In response, the Incheon International Airport Corporation stated to ChosunBiz, “The corporation is making efforts to expedite the departure process by advancing the start times for airline check-in counters and security checks, as well as securing related personnel as much as possible.”