South Korea’s duty-free business turns from bad to worse, surviving on halved sales as air travel remains at standstill for the third month.

Korean duty-free operators recorded 986.7 billion won in sales in April, less than half from 2.25 trillion won earned in January. The figure was even 9 percent lower than 1.87 trillion won in March and more than halved from 1.96 trillion won in June last year when they had posted the lowest monthly sales.

Although sales of downtown duty-free outlets have been propped up by Chinese big-spenders called “daigong” who buy tax-free Korean items in bulk to resell them in China, airport stores have been hit harder due to the fall in foot traffic amid compulsory quarantine for two weeks for all international arrivals conducted since April 1.

The tumbling sales have led to payroll axing. According to Korea Customs Service data released by lawmaker Kim Jung-woo from the Democratic Party, the number of payroll at the nation’s duty-free shops dropped 21 percent from 34,968 in January to 27,605 in April. Contract workers were first to be sacked, according to the data.

Smaller operators suffer a greater shock than their bigger rivals. SM Duty Free, Grand Duty Free and City Duty Free as well as big name operators such as Hotel Lotte and Hotel Shilla surrendered their rights to run stores at Incheon International Airport due to the heavy rent and nosediving sales.

The shops at the nation’s main gateway cannot even shut down their business due to the terms in contract. An industry official complained that closing the stores temporarily could save them a lot of costs but it is out of option.

By Kim Tae-sung, Park Dae-ui, Kang In-seon and Choi Mira

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]