Lotte Duty Free asks IIA to cut rent as business declinesLotte Duty Free, Korea’s top duty-free operator, said Wednesday it has asked the operator of Incheon International Airport to adjust its rental fees, as the industry is struggling to cope with fallout from a diplomatic row between Seoul and Beijing over the deployment of a U.S. missile system.
Last week, Lotte said it was reviewing the option of withdrawing from the country’s main gateway, located west of Seoul, if the airport operator refuses to cut the rent to help it weather a fall in the number of Chinese tourists, Lotte’s main customers.
“We have officially requested Monday that Incheon International Airport (IIA) reasonably adjust the lease fee,” the company said in a press release. “We are again trying to discuss the issue with IIA to avoid the worst-case scenario of discontinuing our business at the airport.”
It has asked the airport operator to come up with a schedule for consultations within a week.
In 2015, Lotte Duty Free agreed to a five-year deal to pay rent totaling 4.1 trillion won ($3.6 billion).
Under the new proposal, Lotte insisted that the IIA change the way it pays rent to reflect sales as it cannot pay rent for the remaining period of the five-year contract due to drastic changes in the business climate , including a plunge in the number of Chinese tourists.
The company said it expects to suffer a 200 billion won deficit this year. Yonhap