Incheon International Airport Corporation (IIAC) is expected to award temporary license extensions to the airport’s current duty free operators to cover the transition period from the end of the current concession period on February 28, 2015, until Incheon Airport’s still-to-be-selected new operators take over their outlets.

 

IIAC has set 30 January as the closing date for submitting bids, following which the bid evaluation process will begin and then the new concession awards announced.

 

“Bidding will close at the end of January,” Sang J. Ahn, Director of IIAC Concession Team 1, told TRBusiness. “We will start bid evaluation at the beginning of February and decide about mid-February.

 

“I don’t think the new operators will be ready to start at the beginning of March as they will need time for shop fitting out negotiations before they can build and open their shops.”

 

IIAC originally was expected to announce tenders for Incheon Airport’s duty free concessions in mid 2014 with the concession awards then anticipated by the end of September. However, the delay in appointing a new CEO to head IIAC, along with several other factors have caused the tender timetable to fall behind schedule.

 

Sang J. Ahn, Director of IIAC Concession Team 1.

 

In addition, the decision to increase the number of duty free concessions at Incheon Airport from seven to 12 – by introducing new concession categories for SME operators – means the transition process will be more complicated than under the old concession system.

 

With bid evaluation expected to be completed just two weeks before the current concessions expire, at the earliest, the new concession holders will not have time to arrange merchandise supplies and set up shop for the original March 1 concession start date.

 

The change in the concession system means some outlets will see a change in the product category being sold. In addition, almost all outlets will undergo internal renovation to accommodate the changes in brands and merchandise being offered.

 

Table of IIAC’s tender packages.

 

Assuming the tender evaluation and bid award process proceeds smoothly and meets IIAC’s tight deadline, the transition process is likely to be spread over at least two or three months and will require careful planning to avoid inconvenience to passengers and damaging sales.

IIAC will be looking to get the new concession holders in place and the renovated outlets up and running as fast as possible, certainly with all work completed in time for the 2015 summer peak season to begin.

 

Growing Chinese visitor numbers are expected to drive duty free sales growth at Incheon Airport for the next 12 months at least as the new concession holders settle in.

 

IIAC will be looking to appoint operators with a clear understanding of the Chinese passenger-preferred goods. But they will also be looking for operators who can cater to the domestic South Korean passenger and Japanese duty free shoppers, which still account for an important share of spending at Incheon Airport.