Arrival duty-free selection begins

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Arrival duty-free selection begins

Nine companies have applied to bid for the first on-arrival duty-free shops at Incheon International Airport, the airport’s operator announced Thursday.

Among the bidders is Dufry Thomas Julie Korea, a local subsidiary of the Swiss-based travel retailer. Its participation may trigger a backlash within the industry as the government earlier announced that it will only allow small- and medium-sized firms to participate.

Dufry globally operates more than 2,000 duty-free and duty-paid shops.

Other bidders vying for the spots include SM Duty Free, Entas Duty Free, Grand Duty Free and Daedong Duty Free. They were picked by Korea Airports Corporation, and the final bidders will be confirmed by the Korea Customs Service by early April.

On-arrival duty-free allows travelers to purchase duty-free items after they return to Korea from trips abroad. The purpose is to encourage domestic spending and to make travel more convenient for Korean tourists, who sometimes purchase goods while departing Incheon and carry them throughout their trip.

The duty-free operators will be encouraged to carry more local products compared to departure duty-free shops.

Cigarettes, a duty-free mainstay, will not be allowed for sale as well as other items that could affect quarantine procedures.

Two arrival duty-free shops will open in the first and second terminals of Incheon airport. After six months, they will expand to other airports, such as Gimpo International Airport and Daegu International Airport.

Operators without any duty-free management experience have been permitted to compete. Profits the airport earns from the on-arrival duty-free operations will go toward public interest spending, like the support of low-income households.

A two-phase bidding process is being utilized. The proposals will be evaluated first on operational ability and then on price. Evaluation criteria include commodities and brands offered, store management and customer service, operating performance, store design and planning for investment and profit and losses.

Though Dufry Thomas Julie Korea is seen as the most likely candidate, industry insiders believe its participation violates standards of fair competition.

Dufry is the world’s No. 1 duty-free operator, but it has been categorized as a small- and medium-sized company in Korea after it formed a joint venture with local firm Thomas Julie.

Dufry currently owns a 45 percent stake in the joint venture, while Thomas Julie has the remaining 55 percent.

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