[Korea duty-free in 2019] Airport duty-free with no flight

기사입력 : 2020-07-09 15:58:33 안상준 기자
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COVID-19 made WHO to finally declare a pandemic situation on March 11th. Incheon Airport said on March 16th at the meeting with the related organizations under the Ministry of Land, Infrastructure and Transport, “Passenger demand dropped by 91.5%, from daily average of 170,000 pax in 2019 to 14,000 pax on March 12th 2020, Also they forecasted that the lowest demand will happen in April 2020”.

▲ Infographic = Hae Young Yuk

 

▲ Infographic = Hae Young Yuk

 

▲ Infographic = Hae Young Yuk

 

In specific, Incheon Airport compared with the cases of SARS originated in Guangdong Province, China from April to July 2003, also MERS out of Saudi Arabia from May to June 2015. They analyzed that the lowest air travel demand had happened in the following month of the peak number of the patients. Based on their experience, Incheon Airport said, “there is a greater rate of sales decrease in the commercial facilities including duty-free, than the decrease rate of the passenger number using the airport, and the rate of sales decrease is increasing”.

▲ Infographic = Hae Young Yuk

 

According to the statistics of Chinese passengers at Incheon Airport, the number began to decrease from the 4th week of January compared to the same month of the previous year. Chinese visitors recorded the highest decrease in the 1st week of March by 86.4% drop. This trend is not limited to Chinese nationals, but also has been influenced by both Japan and neighboring Southeast Asian countries as well as visitors from all over the world.


Because of this situation, Incheon Airport duty-free, which had the highest airport sales in the world,  is facing a serious crisis. On March 16th, Incheon Airport said, “The sales of duty-free shops at airport departures area has recently decreased by about 80%”. The sales decrease rate for all tenants including duty-free was 44.3% in February and 78% in March, the average loss in sales was 56.2% throughout February and March 2020”.

 

However, if the rebound is successful after hitting the lowest bottom in April as the airport predicted, it is expected to be able to defend the sales at a level of 53.9% decrease compared to the previous year in anticipation of total sales in the first half. To this end, the airport said that it would preferentially focus on marketing to fundamentally recover aviation demand through ‘Welcome back marketing’ by significantly increasing the incentives to attract airline passengers and commercial facilities users.

▲ Infographic = Hae Young Yuk

 

Incheon airport is currently implementing a 25% discount for 6 months in rent for SME duty-free operators (Grand Duty Free and City Plus Duty Free). In addition, the discount of rent for large corporates which account for 96% of Incheon Airport’s commercial rentals, is also being proposed to the government for a 3 to 4 month relief measure. Also, they are proposing to actively conduct the joint marketing to recover the passenger demand to escape the crisis in commercial facilities, as an alternative solution.

▲ Infographic = Hae Young Yuk

 

Meanwhile, Korea Airports Corporation(KAC) also released the data on March 10th, “From February 1st until February 26th, 2020, international passenger number fell by 61.7% from the same period of the previous year, and 87% fell out of Chinese routes”. According to data, the number of passengers using China route decreased from 319,598 pax in February 2019 to 4,165 pax in the same month of 2020 . The number of flights operated has also decreased by 73.9% from 2,043 flights in 2019 to 532 flights in 2020.


Korea Airports Corporation also released data of each airport they own and operate. This data show that passenger number from February 1st to February 29th, 2020. The biggest fall happened at Cheongju airport with the decrease of 84.1%. Jeju airport, which is highly dependent on the Chinese route, also fell by 79%. The major airports with reduced international flights showed the decrease. By 43% at Gimpo Seoul and by 61.8% at Gimhae Busan airport. It can be said that the number of duty-free shoppers decreased due to the reduced flights.

 

▲ Infographic = Hae Young Yuk

 

Data on the decrease in sales of commercial facilities located at the airport were also released at the same time. Commercial facilities at airports operated by the Korea Airports Corporation have a higher rate of decrease in sales for international flights than domestic flights. Compared to the same period of the previous year, daily sales in domestic terminal decreased by 53.5% while the sales at international terminal decreased by 71.9%. Although it was not disclosed as detailed data, the sales decline was 69.7% in duty-free shops, 60.8% in the food and beverage category, and 48.6% in other categories.
 

Lotte Duty Free, which operates a duty-free shop at Gimpo International Airport, entered a temporary suspension of business on March 9th when the number of flights drastically decreased due to the invalidation of visa waiver between Korea and Japan. When the international flight, which averaged 20- 24 flights a day, came to virtually no operation. It was decided to enter into a temporary suspension for a while after consultation with Korea Airports Corporation.


Since Lotte Duty Free entered into a rental contract based on the minimum annual guarantee when it entered Gimpo Airport Duty Free, it was unreasonable to operate the store in the absence of sales. On the other hand, Shilla Duty Free, another operator of Gimpo Airport, is expected to enter a temporary suspension in the 4th week of March because their contract is relatively low rent based on revenue share.

[저작권자ⓒ (주)티알앤디에프뉴스. 무단전재-재배포 금지]

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