Incheon International Airport’s duty-free zones for perfumes, cosmetics, liquor, and tobacco are facing an unprecedented shutdown as a standoff over rent reductions escalates. Incheon International Airport Corporation (IIAC) has formally rejected court-led mediation efforts and declared that it will not participate in further proceedings.

Shilla Duty Free and Shinsegae Duty Free, which operate in the affected zones, are continuing mediation efforts but are reportedly leaning toward full withdrawal if negotiations fail. The move could lead to significant inconvenience for travelers and a reduced selection of products at the airport.

At a briefing held on August 12th, 2025, IIAC said that the current rent levels were established via an open competitive bidding process, with operators voluntarily submitting high offers. Under the contract terms, rent adjustments are only permitted in cases involving operational changes such as relocation, downsizing, expansion, or closure - none of which apply in this situation.

The corporation emphasized that Shilla and Shinsegae each won ten-year concessions after submitting bids that exceeded the minimum required amounts by over 60 percent. Based on legal advice from two law firms, IIAC said it will not attend the second mediation session scheduled for August 28th, 2025. The legal analysis reportedly warned that engaging in mediation under the current circumstances could raise issues of fiduciary breach and unfair treatment compared to other profitable operators.

Shilla Duty Free secured the DF1 and DF3 concessions at Terminals 1 and 2, while Shinsegae Duty Free won DF2 and DF4, in July 2023. The companies bid 8,987 won ($6.51) and 9,020 won per passenger respectively - well above the minimum acceptable levels of 5,346 won and 5,616 won. These bids were accepted over a ten-year term, but both operators filed for court-led rent adjustment as cumulative losses grew.

The court appointed Samil PwC to assess rent levels under a potential rebid scenario. The appraisal concluded that the current market value would be roughly 40 percent lower than existing rents.

Legal representatives for Shilla and Shinsegae indicated that unless IIAC changes its stance, both companies are seriously considering a full withdrawal. If they exit their contracts early, they would each owe about 190 billion won in penalties to IIAC. They would also face disadvantages in the evaluation of any future bids within one year but are reportedly considering legal action to reduce the penalties.

Should the withdrawal occur, approximately 8,965 square meters, or around 43 percent of the 20,892 square meters currently operated by large duty-free businesses in Terminals 1 and 2, would be vacated. Although smaller operators still offer cosmetics and liquor, the range of consumer options would be significantly diminished.

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