Only Lotte and Hyundai Duty Free took part in the re-bidding for the Incheon International Airport duty-free concessions that Shinla and Shinsegae Duty Free returned. Shinla, Shinsegae Duty Free, and overseas candidates Avolta (formerly Dufry) of Switzerland and China Duty Free Group (CDFG) all did not participate.
Incheon International Airport Corporation (IIAC) accepted applications to participate and bid documents (proposals and price bids) for the DF1·2 (cosmetics, perfume, liquor, tobacco) duty-free zones at Incheon Airport from 2 p.m. to 5 p.m. on the 20th. It came about a month after the public tender notice in Dec. last year and a briefing session.
Lotte and Hyundai Duty Free were the ones that submitted both the application to participate and the bid documents on the day. Shinsegae Duty Free submitted only the application to participate and did not submit bid documents with about 10 minutes left before the deadline. The Shilla Duty Free, Switzerland's Avolta, and China's CDFG did not apply to participate.
Although there had been expectations that all four domestic companies would compete, Shinla and Shinsegae Duty Free gave up on bidding after watching one another until the last minute. Shinla and Shinsegae, which returned the concessions after a dispute with the corporation over rent, had been seen as likely to try again as the corporation lowered the expected price (the minimum acceptable rent per passenger).
According to the corporation, the rent structure maintains the per-passenger rent method, which calculates rent by multiplying passenger numbers by the per-passenger unit price proposed by the operator, but the minimum acceptable per-passenger unit prices were presented as 5,031 won for DF1 and 4,994 won for DF2, respectively, which are 5.9% and 11.1% lower than in the 2022 public tender.
Avolta of Switzerland and China's CDFG, which vie for the global No. 1 and No. 2 duty-free positions, ultimately pulled out as well. Avolta drew attention as a strong candidate after attending last month's re-bid briefing as the only overseas operator. CDFG was mentioned as a possibility because it participated in the 2023 tender.
With effectively only Lotte and Hyundai Duty Free participating in the re-bid, absent a major twist, the two companies are expected to split the DF1 and DF2 zones one each. The DF1 and DF2 zones were operated by Shinla and Shinsegae Duty Free, respectively. Overlapping bids are allowed, but overlapping awards are not permitted.
Lotte Duty Free, which came up short in the 2023 bidding competition, is set to return to Incheon Airport after two and a half years. While its low bid was an issue at the time, analysts said it was also hampered by its past record of returning a concession. Lotte has been seeking a chance to return to the airport before and after the re-bid.
A Lotte Duty Free official said, "After a thorough review of the market environment and the request for proposal (RFP) conditions, we have submitted final proposals for the DF1 and DF2 zones," and added, "We will do our best in the remaining bidding procedures, including the upcoming presentation."
Incheon Airport plans to notify the Korea Customs Service of the qualified operator after a presentation (PT) review of the two companies.