Shilla Duty Free & Shinsegae Duty Free set to sweep major Incheon tenders; Hyundai DF in running for DF5; Kyung Bok Kung and City Duty Free top SME bids

SOUTH KOREA. Following their respective aggressive bids for the various Incheon International Airport Terminal 1 and 2 duty free contracts, The Shilla Duty Free and Shinsegae Duty Free are set to share the four key concession packages (DF1, 2, 3 and 4 below).

Both have been shortlisted for the second round of assessment to be conducted by Korea Customs Service (KCS), Incheon International Airport Corporation (IIAC) announced yesterday.

IIAC will be delighted by the impact the world number one’s presence has clearly had on the two lead candidates’ financial offers

Incheon International Airport Corporation reveals the short-listed candidates to proceed to round two of the assessment

For DF5, Shinsegae Duty Free tabled the top offer ahead of Shilla but third-placed Hyundai Duty Free appears set to pick up the spoils as a single retailer can only win one package within the two groups on offer (Group One: DF1 and DF2; Group Two: DF3, DF4, and DF5). All three have been short-listed for the second round.

Incumbents Cityplus Duty Free and Kyung Bok Kung Duty Free have been shortlisted for the two concessions set aside for small and medium enterprises.

Only the short-listed parties go forward to the KCS presentation, meaning Lotte Duty Free and China Duty Free Group (CDFG) drop out of the running unless another retailer chooses not to proceed in round two.

The IIAC scoring is based on a combination of business plan (60%) and financial offer (40%). In the subsequent KCS judging, the financial offer accounts for 400 points and the business plan 500, with the IIAC business plan worth another 100.

Source: The Moodie Davitt Report; Korean sources. Click on table to expand

Incheon International Airport Corporation the big beneficiary of CDFG presence

Key talking points include the aggressive approaches of Shilla and Shinsegae and the highly conservative offers by Lotte Duty Free, clearly concerned about the future profitability of the airport business.

China Duty Free Group, which would have become the first foreign retailer to operate at Incheon since DFS was ousted in the 2007 tender, bid with unexpected prudence.

Its appearance seems to have spooked both Shilla and Shinsegae which have bid aggressively on DF1 and DF2 in particular, but also at an unexpected level on DF3 and DF4.

Through its measured strategy, China Duty Free Group has sent out a statement that it will not bid at any cost simply to secure offshore contracts. IIAC will be delighted, though, by the impact the world number one’s presence has clearly had on the two lead candidates’ financial offers. ✈

KCS is expected to reveal the winner for each package by mid-April. The concessions kick off on 1 July.

Click here for our detailed analysis of the tender packages.

The critical wording, which confirms why neither of the top two financial bidders for each of the concessions, The Shilla Duty Free and Shinsegae Duty Free, will be awarded more than one contract in group one or two.

Note: The Moodie Davitt Report is the industry’s most popular channel for launching commercial proposals and for publishing the results. If you wish to promote an Expression of Interest, Request for Proposals or full tender process for any sector of airport or other travel-related infrastructure revenues, simply e-mail Martin Moodie at Martin@MoodieDavittReport.com.

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Please send relevant material, including images, to Martin Moodie at Martin@MoodieDavittReport.com for instant, quality global coverage. ✈


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