Kim Hyun-bin began his journalism career at Arirang TV from 2012 to 2017, specializing in defense, foreign affairs and the economy. In 2018, he joined The Korea Times, covering society and business, and is currently responsible for embassy affairs.
Arrival duty-free shops unnerving airlines
A Korean Air flight attendant prepares to give in-flight duty free goods to customers. Incheon International Airport is scheduled to open arrival duty free shops May 31, which is expected to take a toll on airlines inflight sales. Courtesy of Korean Air
By Kim Hyun-bin
By Kim Hyun-bin
The planned opening of arrival duty-free shops at Incheon International Airport is making local airlines selling duty-free items on their flights nervous, amid speculation their sales may decline.
On Friday, two arrival duty-free shops will begin operations in Terminal 1 and one in Terminal 2, according to the Incheon International Airport Corp. (IIAC).
Local airlines are worried as there are scores of overlapping products that will be sold at the arrival duty-free stores and the convenience factor of not having to carry their purchases during travel will appeal to customers.
Experts believe the deciding factors for buying at duty-free arrival shops instead of in-flight will come down to marketing and differentiation of the products they are selling.
Last year, sales of inflight duty free goods by the country's two full service carriers Korean Air and Asiana Airlines stood at 154.2 billion won ($130 million) and 90.2 billion won, respectively, but those are expected to be negatively affected by the launch of the arrival duty-free stores.
“There is no doubt it will affect in-flight duty-free sales as many will utilize the arrival duty-free shops instead of purchasing onboard the airplane,” an airline official said.
“However, the arrival duty-free shops will create unnecessary congestion near the baggage claim area, which will inconvenience travelers.”
There are also concerns that the shops could become a hazard to airport security as arrival hall congestion could create difficulties in customs and quarantine inspections.
The shops are built near the baggage claim area, and some experts point out this will create unnecessary congestion. They also claim the duty free shops could be used as diverse escape routes for possible criminals to dodge surveillance and quarantine as well as other illegal activities by taking advantage of the crowds.
To better counter the prospective concerns, the IIAC plans to boost its surveillance and security capabilities.
"We plan to install more CCTVs and dispatch scores more security and customs agents to the arrival areas than the departure zones," the official said.
The shops are a part of measures to alleviate the inconvenience of having to travel with duty free goods purchased at the departure area. The government also expects it to create hundreds of jobs.
SM Duty Free will operate two shops at T1 and Entas Duty Free one outlet at T2. They were selected as store operators according to the government policy giving preference to small- or mid-sized companies.
While selling highly popular items such as cosmetics, perfume and liquor, the duty free shops will provide a higher portion of domestic goods compared to those at departure terminals. Cigarettes and other products that can affect duty and import procedures will not be available.
The Korea Customs Service believes the launching of the arrival duty-free stores will lead to an increase in sales by travelers who previously purchased alcohol and cosmetics at foreign airports purchasing the items at Incheon.
In addition, many experts believe the continuous increase in foreign tourists to the country in recent years will fuel growth at the arrival duty-free stores.
Last year, 2.4 million Koreans who travelled abroad spent 3.1 billion dollars at duty free stores, but that number is expected to rise as there are more locals travelling abroad each year.
Setting up arrival hall duty-free shops has become a global trend. Out of 333 airports in 88 countries, 149 of them in 73 countries have shops in operation, according to the Airport Service Quality (ASQ).