Incheon International Airport has confirmed that Entas Duty Free and SM Duty Free have been shortlisted for South Korea’s first airport arrival duty free shop concessions and is predicting that first year arrival shop sales in Terminal 1 will be double those in T2.

Entas Duty Free and SM Duty Free both operate duty free shops in Incheon Airport T1 and T2 in addition to downtown duty free stores in Incheon and Seoul respectively, which also involve running multilingual online duty free shopping services.

Entas also operates a duty free departure shop in Incheon Seaport serving ferry passengers sailing to various ports in China.

“We have been short listed with SM Duty Free for both AF1 (T1) and AF2 (T2) concessions,” David Yu, CEO of Entas Duty Free, told TRBusiness. “We are very excited that we have been shortlisted for both concessions.”

“IIAC estimates that AF1 will generate KRW 70 billion and AF2 will do KRW 35 billion in duty free revenue. Entas Duty Free already operates duty free shops in T1 and T2. The addition of arrival duty free stores will strengthen our presence at the airport and create a lot of synergy for our airport operation.”

Entas Duty Free’s L&T store at Incheon Airport’s Terminal 1.

FINAL DECISION DUE IN APRIL

Having satisfied IIAC with their bids, Entas Duty Free and SM Duty Free must now convince Korea Customs Service (KCS) with their business proposals. KCS is expected to announce a final decision during the first week of April.

As reported, Incheon Airport received fourteen bids for its two arrivals duty free concessions in Terminal’s 1 and 2, an airport source involved in the process has told TRBusiness.

While both operators aim to win the two concessions and run arrival shops in both T1 and T2, it’s possible that KCS could err on the side of caution and award the contenders one arrival concession each.

KCS will closely monitor the launch of airport arrival duty free shopping in Incheon Airport as Gimpo, Jeju and other Korean international airports are already requesting permission to open their own arrival duty free shops.

IIAC’s forecasted arrival sales split between T1 and T2 is based on duty free departure shop sales and international passenger traffic trends in the two terminals in 2018. Korean Air and other Skyteam members are based in T2 while Asiana Airlines, foreign airlines and LCC carriers use T1.

Entas Duty Free’s store in downtown Incheon, South Korea.

T2 DEPARTURE DF SALES TOP $682M IN 2018

The per capita departure duty free spend is higher for customers in T2, according to IIAC, compared to passenger spending in T1.

“Total T2 departure duty free sales in 2018 reached US$682m,” Kim Chang Kyu, Executive Director of IIAC’s Concession Development Group, tells TRBusiness.

“The share of T2 was 29% while T1 was 64% and T1 Concourse A was 7%. Per departing passenger, the value of T2 duty free sales is biggest among the three locations in Incheon: T2 is US$100, T1 is $76 and T1 Concourse A is $18.”

The ratio of passenger traffic between T1 and T2 was similar to the split of duty free sales in 2018 – about 75% of the 67.7m arriving and departing international passengers using Incheon Airport last year passed through T1 while 24% used T2 in the 11 months after opening.

“We are excited about the arrival shops,” Kim adds. “Before we prepared the shop plans we did a survey and 80% of passengers wanted arrival shops as it’s easy for them to buy liquor and cosmetics.”