Passenger traffic at South Korea’s Incheon International Airport rebounded to pre-pandemic levels in 2024, with 35.31 million outbound travelers recorded, but duty-free sales have lagged, reaching just 72% of 2019 levels, data showed.
Despite the recovery in travel demand, duty-free operators at Incheon Airport are struggling with losses, raising concerns that some may exit the business. On March 11, South Korean lawmakers held a forum to explore ways to support the industry, which is grappling with shifting consumer trends and economic headwinds.
Incheon Airport’s international passenger traffic hit a record high in 2024, surpassing pre-pandemic levels. However, duty-free sales remained subdued at 2.01 trillion won ($1.52 billion), down from 2.79 trillion won in 2019.
Experts attribute the sluggish recovery to structural changes in consumer behavior. “The decline in Chinese bulk-buying traders played a role, but it’s not the sole reason,” said Kim Suk-kyung, a senior researcher at the Korea Institute for Industrial Economics and Trade. “Foreign tourists are prioritizing experiences over shopping, opting for budget-friendly retail outlets instead of airport duty-free stores. Meanwhile, South Korean travelers are spending more on shopping and activities abroad rather than at domestic duty-free shops.”
Currency fluctuations have further dampened demand. The strong U.S. dollar has made duty-free products less competitive, while the weak Japanese yen has drawn South Korean travelers to shop in Japan rather than at Incheon Airport.
The tough environment has weighed on duty-free operators, with major players posting losses in 2024. Shilla Duty Free reported an operating loss of 69.7 billion won, its first in four years. Shinsegae Duty Free swung to a 35.9 billion won loss, while Hyundai Duty Free posted a 28.8 billion won deficit. Analysts expect profitability to remain under pressure this year.
Operators argue that the current rental fee structure at Incheon Airport is unsustainable. In 2023, the airport switched from fixed fees to a passenger-based rent model, assuming higher traffic would drive sales. Instead, shifting shopping trends have created a revenue mismatch.
Shilla and Shinsegae, which together occupy 69% of Incheon Airport’s duty-free space, paid 505.1 billion won in rent last year—39% of their total sales.
At the parliamentary forum, tourism expert Hong Kyu-seon from Dong Seoul University pointed to international precedents, noting that Singapore’s Changi Airport offers a 15% rent reduction for major duty-free operators. “Incheon Airport’s duty-free sector needs urgent support,” Hong said. “If the industry collapses, it will ultimately hurt the airport, travelers, and the broader economy, with ripple effects on Incheon Airport’s service quality and the competitiveness of South Korean airlines.”
