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
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.
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.
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