SEOUL: Korea’s airport hub and customs agency are locking horns over the process of selecting duty free operators for the former’s new passenger terminal zone.
Despite continuous explanation and warning that the Korea Customs Service (KCS) has the sole authority over the selection and licensing of duty free shops under the current law, the state-run Incheon International Airport Corp. (IIAC) said that it would proceed with the plan to choose the duty free shops via bids by the end of April.
The selected operators will then be able to open their shops when the airport launches its new passenger terminal in October this year. IIAC is wholly owned by the government and is overseen by the Ministry of Land, Infrastructure and Transport, while the KCS operates under the wing of the Ministry of Strategy and Finance. The KCS defied the airport’s unilateral action, saying that it would legally nullify any decision IIAC reaches regarding the selection of duty free shops.
“The airport may have the right to seal deals with commercial property operators enabling them to run not only drug stores, restaurants but also duty free shops. But under the customs law, the KCS has the authority to review candidates and grant duty free licenses,” an official of the customs agency said.
However, the airport said that further delay in the bidding and selection process would “negatively affect its commercial rent earnings, thus operations.”
The airport plans to designate three shops run by conglomerates and three by small- and medium-size enterprises in the 10,000 square meter shopping zone of the new passenger terminal as part of its expansion.
The two sides have failed to reach consensus as the Incheon International Airport seeks to rapidly proceed with its plan given its high reliance on commercial rent business for operations, while the customs agency seeks to wait until relevant revisions are passed at the National Assembly.
The revisions aimed at promoting fair competition and prohibiting monopolies of duty free conglomerates are on hold for further discussion. It is expected to take at least two month for related lawmakers to review the revisions.
In 2015, Incheon Airport’s earned some 1.2 trillion won in non-transport business, including commercial rents, out of about 1.9 trillion in net profit. Its transport business only earned 685 billion won, according to data by the Democratic Party of Korea, the main opposition.
