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Incheon Airport draws blank in duty-free auction amid pandemic

Incheon Airport duty-free zone (IIAC)
Incheon Airport duty-free zone (IIAC)
Incheon International Airport, the country's main gateway, failed to draw enough bidders in duty-free auctions Tuesday, its operator said, underscoring an extended slump in the duty-free business sector amid the coronavirus pandemic.

The Incheon International Airport Corp. (IIAC) auctioned six duty-free sections for cosmetics, perfume, liquor, tobacco, fashion and miscellaneous goods in the airport's Terminal 1.

As widely expected, industry leader Lotte Hotel and No. 3 player Shinsegae took part in the auction. But their bids fell through, as pre-set rules were not met.

No. 2 player Hotel Shilla and smaller rival Hyundai Department Store Duty Free did not join the bidding.

The IIAC plans to hold another auction next month for botched duty-free operations at the airport.

The IIAC has proposed a sharp cut in lease fees and other favorable business conditions to attract viable bidders.

But local duty-free operators are still suffering from the industry-wide slump, as the number of customers have sharply fallen amid air travel disruptions.

In February, the IIAC auctioned eight new licenses for duty free operations at the airport, but the auction to run two sections at the airport fell through due to a lack of tenders.

At that time, Hotel Shilla and Lotte Hotel won the business rights to operate the DF3 and DF4 sections, mostly handling liquor and tobacco, respectively.

But they surrendered the licenses and did not clinch deals with the IIAC in April due to the virus outbreak.

As the airport operator failed to pick new entities, Lotte and Shilla have continued to run their business after extending their existing licenses.

Local duty-free operators saw their sales improve in recent months, but their revenues remain far below the pre-pandemic level.

Combined sales at duty-free shops in South Korea reached 1.25 trillion won ($1.08 billion) in July, up 12.4 percent from the previous month, as small Chinese vendors returned to scoop up duty-free goods, according to industry data.

It marked the third straight month of gains since the figure fell below 1 trillion won for the first time in four years in April. (Yonhap)