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Shilla to pull the plug on duty free store at Incheon Airport

Published: 18 Sep. 2025, 19:43

LIM JEONG-WON
[email protected]

Travelers walk through the duty free zone of Terminal 2 at Incheon International Airport on Sept. 1. [YONHAP]

Hotel Shilla will pull the plug on its duty free store at Incheon International Airport after rent negotiations with the airport fell through, the company said Thursday.

The decision to return its concession was approved at a board meeting earlier Thursday and was disclosed through a regulatory filing.

“Since signing the concession contract for the Incheon International Airport duty free operation in 2023, the duty free market has experienced rapid environmental changes due to changes in the consumption patterns of our main customer base and declining purchasing power,” said Hotel Shilla in a statement. “We requested rent adjustments from the Incheon International Airport Corporation, but these were not accepted.”

“We are facing significant losses and will be unable to continue operating at Incheon International Airport,” the company said.

Hotel Shilla explained that under such conditions, continuing operations at Incheon Airport would generate losses that were “too large” to sustain. It added that the concession return was decided in order to improve its financial structure and enhance corporate and shareholder value.

In recent months, Shilla Duty Free and Shinsegae Duty Free have faced growing losses at their Incheon International Airport operations and have requested steep reductions in the rent fees they pay to the airport authority.

Travelers walk through the duty free zone of Terminal 2 at Incheon International Airport on Sept. 1. [YONHAP]

Earlier this year, they sought cuts of about 40 percent, citing rising operating costs, weak consumer spending, shifting tourist behavior and the burdens of a rent formula tied to passenger numbers rather than fixed rates. Operating losses are reportedly as high as 5 to 6 billion won ($3.6 to $4.3 million) per month for each of the operators under current terms.

On Aug. 12, the Incheon International Airport Corporation rejected the rent cut proposals and declined to attend further mediation sessions. The corporation argued that the rent levels were agreed upon in the competitive bidding process in 2023, when Shilla and Shinsegae bid to win 10-year concession contracts with passenger-volume-based rents.

The airport commented that reducing those rents less than two years into the contract undermines both the bidding process and "corporate management responsibility."

On Sept. 9, the Incheon District Court issued a compulsory mediation order that would require a 25 percent rent reduction, a figure considered fair by the court in relation to present losses. Shilla Duty Free, however, has not accepted the order, and the Incheon International Airport Corporation has also declared that it cannot comply, citing fairness to all operators and contract sanctity.

BY LIM JEONG-WON [[email protected]]