No. 1 Lotte Duty Free and second-largest Shilla Duty Free have submitted their bids to operate tobacco and liquor concessions at Changi's four terminals after DFS stores in Changi Airport close in June 2020.

No. 1 Lotte Duty Free and Shilla Duty Free are South Korea's two leading duty-free operators.

They have submitted their bids for the right to sell cigarette and liquor products at Singapore's Changi Airport, Yonhap News reported on Aug. 27.

The bid deadline was on Monday.

However, it is a three-way bidding war.

Germany's Heineman Duty Free also submitted a bid for the contract.

Strict requirements

The existing shop operators, DFS of the United States and China Duty Free Group, which attended a pre-bid road show in June, did not bid.

World No. 1 duty-free operator Dufry also did not bid.

DFS has been operating shops at Changi Airport since 1980.

It didn't seek an extension of a contract late 2018.

Industry watchers said those that have dropped out was due to a high minimum bidding price and strict requirements.

Since April 1, 2019, the alcohol duty-free concession has been cut by 33 percent from three litres to two litres.

From July 1, 2020, tobacco products sold in Singapore must have standardised packaging and enlarged graphic health warnings.

The changes will apply to all tobacco products, including cigarettes, cigarillos, cigars, beedies, ang hoon and other roll-your-own tobacco products.

Implications

DFS manages 18 liquor and tobacco stores at the airport.

The total retail space it operates out of is over 8,000 sq m across the four terminals.

Hundreds of staff are expected to lose their jobs, The Straits Times reported.

Ensure smooth handover

In response to media reports of the impending closure, a DFS spokesperson said the retailer remains "fully committed" to its future in Singapore.

Staff may also be offered deployment at the luxury concessions at Changi, the downtown operations at T Galleria by DFS, Singapore, as well as the retailer at the Singapore Cruise Center.

All of these businesses are unaffected by DFS' decision to withdraw from the liquor and tobacco concession at Changi Airport, the spokesperson said.

The spokesperson also revealed that around 500 people are directly employed to service DFS' liquor and tobacco concession operations at Changi Airport.

DFS will work closely with the new operator to ensure a smooth handover when the expected announcement of the new retailer is made in November 2019, the spokesperson added.

"As with all airport concession handovers, a number of options are available to staff," the spokesperson said.

"These include working with the new operator depending on their aspirations and needs, and working with other operators in the airport community."

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