Go nowhere but come home with duty free

Industry

Published: 14 Feb. 2021, 07:00

Go nowhere but come home with duty free

A passenger leaving for a no-destination flight on Jeju Air heads to the departure gate with purchased duty-free items at Incheon International Airport on Dec. 12, 2020. [YONHAP]

Flights to nowhere, the favorite non-vacation for pandemic times, continue to be popular — and duty-free shopping is one big reason.

In December, when the government first allowed so-called no-destination flights — flights that take off, circle around and return to the same airport a while later — low-cost carriers jumped into the game. Last month, Asiana Airlines and Korean Air started offering such flights.

According to the Ministry of Land, Infrastructure and Transport and sources in the aviation industry, 2,700 people went on international no-destination flights during the last two months, which travel beyond Korean airspace.

Passengers on international no-destination flights get the same duty-free benefits as on regular international flights. Taxes are exempted on a maximum of $600 of goods, one bottle of liquor worth up to $400, 200 cigarettes and up to 60 milliliters of perfume. Passengers can buy the duty-free items on the flights, at the terminal before or after the flights — and also at duty-free stores in the city or even online with proof of their purchase of the flight tickets.

According to Lotte Duty Free's analysis of data from 1,700 no-destination flight customers over the last two months, luxury bags and wallets were the most popular purchase, 39 percent of all sales. Next in line were cosmetics and perfumes, with 32 percent, followed by watches and jewelry (12 percent) and liquor and tobacco (8 percent).

For Shinsegae Duty Free, cosmetics and perfume accounted for 55 percent of all sales from no-destination flight customers, followed by luxury fashion items and watches and jewelry.

For both companies, the top 10 brands by revenue included Chanel, Hermes, Prada, Tag Heuer, Biotherm, Sulwhasoo and Jo Malone London.

“There were many purchases of luxury wallets, since people can take advantage of tax exemption benefits to spend up to $600,” said a spokesperson for Lotte Duty Free. “Based on the number of purchases, people bought cosmetics products the most, but since luxury fashion item prices are the highest, they take up the biggest share of total sales.”

“Some people spend over the $600 limit and pay the tax until they reach the purchasing limit for Koreans, which is $5,000.”

In terms of number of purchases, cosmetics and perfumes came out on top. Popular skincare and cosmetics brands included Biotherm, Primage and L’Occitane at Lotte Duty Free. At Shinsegae Duty Free, Sulwhasoo and Estee Lauder sold well.

At Shinsegae Duty Free, premium perfume brands like Diptyque, Jo Malone London, Creed and Le Labo, which have been rising in popularity since the pandemic hit, were all included in the top sales ranks. Creed Aventus, a men’s cologne from Paris-based Creed, was particularly popular.

Sources in the aviation and duty-free industries say that no-destination flights are helping them bring in some revenue despite the pandemic.

Some 97 percent of all international flights have been wiped out by the virus crisis.

“Revenues from no-destination flights are not that high, but airlines can maintain planes,” said a spokesperson for a local airliner. “They can also help pilots maintain their licenses.”

The duty-free industry is getting an unexpected fillip. Sales at Lotte Duty Free grew 80 percent in January compared to December.

The no-destination flights are expected to continue through the end of the year.

This month, which has the Lunar New Year holidays, low-cost carriers like Jin Air and Jeju Air as well as Korean Air have scheduled no-destination international flights for the skies above Japan.

To conform with social distancing measures, only 60 percent of the passenger seats on flights are sold.

“Although China is closer than Japan, China’s traffic rights are complicated, so almost all airliners have picked routes to Japan,” said a spokesperson for Jin Air.

BY BAEK MIN-JEONG [lee.jeeyoung1@joongang.co.kr]