Tax-free shops offer products without additional taxes, making them cheaper than regular market prices. People who travel abroad often buy products they want at tax-free shops due to the price difference compared to regular market prices.
The duty-free shops at Incheon Airport's Terminal 2 are facing an issue where some of their products are now more expensive than the market rate due to the recent strength of the US dollar. This is in contrast to the usual lower prices offered by duty-free shops.
On the 24th, the most popular cigarettes at Incheon Airport's duty-free shop were mostly priced at $30. When the tax-free prices were originally set at the beginning of the year, $30 amounted to around 33,000 Korean won when converted, but now it is close to 40,000 Korean won.
Unlike domestic routes which are priced in Korean won, international routes are priced in US dollars, therefore exchange rates are particularly sensitive.
At Jeju Airport's domestic duty-free shop, Echo cigarettes are sold for 32,000 KRW. The prices at domestic duty-free shops are based on the Korean won and expressed in US dollars, with the Korean won being fixed and the US dollar being fluid.
On the contrary, while the US dollar remains fixed on international routes, the South Korean won fluctuates. If the US dollar exchange rate drops, buyers will benefit, but if the exchange rate goes up, the tax-exempt effect for buyers will be reduced by half.
Even if purchasing the same brand of cigarettes, it is possible to buy them for 32,000 KRW at Jeju Airport's duty-free shop for domestic flights, while they are priced at nearly 40,000 KRW at Incheon Airport's duty-free shop for international flights. This results in a price difference of 8,000 KRW between duty-free shops.
Some cigarettes are actually more expensive than those on the market. One company's electronic cigarette product is sold at 45,000 Korean won on the market, but is sold for $34 at the Incheon International Airport duty-free shop. If converted to Korean won (1,342 Korean won on the 24th), the price would be slightly higher than 45,600 Korean won. This means that due to exchange rates, the duty-free shop price is more expensive than the market price.
Some perfumes are experiencing a similar situation. With the exchange rate increasing by over 20% since the beginning of the year, the duty-free prices are no longer lower than the market prices and, in some cases, have even surpassed them.
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