(LEAD) Shinsegae DF picked as new operator for airport duty-free shops

All News 17:55 June 22, 2018

(ATTN: CHANGES headline, lead; minor edits throughout)

SEOUL, June 22 (Yonhap) -- The customs office said Friday that Shinsegae DF Inc. won the license to operate duty-free shops at Incheon International Airport, South Korea's main gateway, a move that could change the landscape of an industry hit hard by a drop in the number of tourists.

Incheon International Airport Corp. (IIAC), the airport operator, earlier reported Hotel Shilla Co. and Shinsegae DF as the two top candidates to the Korea Customs Service (KCS).

The competition took place as No. 1 player Lotte Duty Free decided to return three of its four money-losing concessions to the airport, located west of Seoul, in the face of huge losses stemming from a plunge in the number of Chinese tourists.

In March last year, Beijing took a set of retaliatory measures against Seoul, including a ban on group tours, following the installation of an advanced U.S. missile defense system in southeastern South Korea.

The number of Chinese nationals who visited South Korea stood at 4.16 million last year, down a sharp 48.3 percent from 8 million tallied the previous year. The Chinese accounted for nearly half of the 17 million foreigners who visited South Korea in 2016.

The airport operator reorganized the three zones at the first passenger terminal into two for the bidding.

Along with Hotel Shilla and Shinsegae DF, Lotte Duty Free and Doosan Co. also took part in the competition as the airport operator loosened the criteria for application, but were eliminated at the earlier stage.

The latest selection could be a game changer for the country's duty-free industry, currently led by the retail giant Lotte.

The combined annual sales from the two zones operated by Lotte are known to hover over 900 billion won (US$811 million) on average, accounting for 6 to 7 percent of the total revenue reported from the country's duty-free sector as a whole.