Lotte, Hyundai win approval to operate new duty-free zones at Incheon airport
Outbound travelers crowd a duty-free area in Terminal 2 of Incheon International Airport in Incheon, Feb. 13, ahead of the Lunar New Year holiday. Yonhap
Lotte Duty Free and Hyundai DF Co. said Thursday they have received approval to operate duty-free zones vacated by two retailers at Incheon International Airport.
Lotte and Hyundai submitted bids in January for licenses to operate the DF1 and DF2 zones. Last month, Incheon International Airport Corp. (IIAC), the operator of the country's main gateway, selected the two companies as preferred bidders.
The previous operators, Shinsegae Duty Free Inc. and Hotel Shilla Co., relinquished their licenses amid declining sales.
With approval from the Korea Customs Service, Lotte and Hyundai will operate the DF1 and DF2 zones, respectively, for seven years through June 2033, with an option to extend the contracts to up to 10 years, IIAC said.
"We expect operations at the DF1 zone to generate more than 600 billion won ($420 million) in annual sales," a Lotte official said.
Hyundai expected annual sales of 1.1 trillion won in the duty-free business.
Shinsegae plans to cease operations at the DF2 zone by April 27, while its duty-free shops in the airport's DF4 zone will continue operating.
In September last year, Hotel Shilla returned its DF1 license to the airport operator.
The DF1 and DF2 zones primarily sell cosmetics, perfumes, liquor and tobacco products.
Duty-free operators have faced mounting losses due to unfavorable market conditions, including a weak won, slowing economic growth and reduced spending by core customers.