Shilla Duty Free will suspend its DF1 duty-free concession at Incheon International Airport in March, citing “excessive losses” and a business value now deemed lower than its liquidation value.

The concession generated KRW$429.2 billion (US$312 million) last fiscal year, accounting for 10.9 per cent of Shilla’s consolidated sales.

“Since signing the contract for the operation of the duty-free shop at Incheon International Airport in 2023, the duty-free market environment has changed rapidly due to changes in consumption patterns and reduced purchasing power,” shared the company.

“As a result, we asked Incheon International Airport Corporation to adjust the rent, but it was not accepted.” 

The decision, approved by the board on September 18, was disclosed in a Korea Exchange filing.

Shilla acknowledged the exit would trigger a short-term decline in sales but said it expects stronger overall financial performance over the medium to long term.

“We decided that it is necessary to improve the financial structure and raise corporate and shareholder value,” added the company. 

“Although the difficulties of the duty-free industry continue, we will do our best to improve profitability.”

Aside from Hotel Shilla, Shinsegae Duty Free has also returned its business rights at Incheon.

Duty Free News International reports that the suspension follows ongoing disputes between Incheon International Airport Corporation (IIAC) and anchor tenants Shilla and Shinsegae.

Both retailers had sought rent reductions of up to 40 per cent on their perfume, cosmetics, liquor, and tobacco concessions at Terminals 1 and 2.

IIAC rejected the requests, stating that rental terms were fixed under the original tenders and could not be revised outside the conditions defined by law.