SEOUL, May 10 (Korea Bizwire) – An attempt to lease out the remaining duty-free store licenses by tender at the new terminal at Incheon International Airport has failed again, as no duty-free operators made a bid, authorities and industry sources said Wednesday.
The auction for licensing to run the apparel and accessories store at the second terminal (T2) at the hub airport that is expected to open later in the year has been put off for a second time due to a lack of tenders, according to Incheon International Airport Corp. (IIAC) and duty-free operators.
Late last month, the IIAC and Korea Customs Service picked Lotte Duty Free and Shilla Duty Free as the respective winners of the liquor and cigarettes and the fragrance and cosmetics sections, which will start operations in October in line with the scheduled opening of T2.
Due to an amendment in the licensing process, duty-free operators in South Korea need approval from both the airport and customs authorities to run an airport duty-free store through public bidding, which is subject to renewal every five years.
While the bidding of the two popular areas prompted big duty-free operators to scramble to win a slot, the fashion and accessories section drew no interest as it was apparently considered less profitable given the high lease fees.
Local duty-free companies are expected to suffer a blow from a steep decline in Chinese tourists who have made up the bulk of their sales after China banned its local travel agencies from selling Korea-bound trips from mid-March.
Beijing has taken hostile actions against South Korean companies and their goods in retaliation for Seoul’s deployment of a U.S. anti-missile system, known as THAAD, which it deems a threat to its own security.
Shinsegae DF and Hanwha Galleria, two other contenders who lost in the first bidding for the two spots, were expected to take part in the new tender, but did not make an offer.
The IIAC said it is looking into putting up another bidding notice for the thwarted section within the week.