The Hanoitimes - Rising air travelers have been the main driver for the growth of duty-free shops at Vietnamese airports.
While domestic duty free retailers have reaped huge benefits from their stores at airports, foreign investors have targeted this business due to Vietnam's booming air traffic, Zing News reported.
Most recently, at the end of July, Lotte Duty-Free has launched its third store at Noi Bai International Airport in Hanoi, after opening stores at Da Nang airport in 2017 and Cam Ranh airport in 2018, with an ambition of gaining US$168 million in revenue after ten years of operation.
Duty-free store in an airport in Vietnam. Photo by JDV.
The South Korean enterprise also plans to open an another duty-free store in the center of Da Nang city in 2019 and others in some tourism destinations nationwide.
King Power, another giant from Hong Kong (China), shook hands with Vietnam Airlines to debut the duty-free Lotushop in October 2018. With its long term experience in duty-free retailing and duty-free store operating in several Asian and European countries, the Hong Kong partner is expected to help Lotushop enhance its service and business efficiency, in order to grasp more share in the rapid-growing duty-free market in Vietnam.
Lucrative business for local players
Sasco, the sole duty free retailer at Tan Son Nhat International Airport in Ho Chi Minh City is holding the lion's share of the business thanks to the overcrowded airport.
In the second quarter of 2019, Sasco earned nearly VND702 billion (US$30 million) from its duty-free retailing at the airport and waiting room services, up 11% year-on-year. Among those, revenue from duty-free retailing reached over VND325 billion (US$13.9 million).
Over the past four years, Sasco’s after-tax profit from duty-free retailing maintained an upward trend, going from VND11.6 billion (US$495,000) in 2015 to VND341.1 billion (US$14.5 million) in 2018.
Other smaller domestic enterprises have also reaped profit from the duty-free retailing.
The after-tax profit of NASCO, the Noibai Airport Aviation Services Company, was at around VND20.5 billion (US$875,000) to VND29.3 billion (US$1.25 million) in the last four years.
Taseco Air partnered with Japan’s Jalux to open five duty-free stores including three in the departure and arrival halls of Noi Bai International Airport and other two stores in the departure and arrival halls of Da Nang International Airport. The company’s profit is on the rise in four consecutive years from VND34.9 billion (US$1.5 million) in 2015 to VND51.4 billion (US$2.2 million) in 2018.