Cathay fliers can soon earn miles in Shinsegae's duty-free stores

Passengers flying to Korea with Cathay Pacific Airways will be able to use their miles for duty-free purchases at Shinsegae DF starting in February. The collaboration aims to attract more tourists to Shinsegae's stores.

Ryu Sin-yul, CEO of Shinsegae DF, right, and Paul Smitton, Asia Miles CEO at Cathay Pacific, sign a business agreement at the Westin Chosun Hotel during a event titled "Strategic Partnership for Travel Lifestyle Ecosystem." [SHINSEGAE DF]

Passengers flying to Korea with Cathay Pacific Airways will be able to use their mileage for duty-free purchases at Shinsegae DF starting next February.

This collaboration between Shinsegae DF, the duty-free arm of Korean retail giant Shinsegae, and the Hong Kong-based airline is intended to attract a more diverse group of Asian tourists to the stores, which were heavily frequented by Chinese groups.

It is the first collaboration between a domestic duty-free operator and an international airline as well as Cathay Pacific's first partnership with a Korean company.

Shinsegae DF operates exclusively within Korea, while Cathay Pacific offers four daily flights between Seoul and Hong Kong.

Shinsegae DF plans to roll out alliance services and benefits for Cathay Pacific's “Asia Miles” members, allowing them to accumulate miles through purchases and redeem them at more than 90,000 affiliated locations, including hotels, dining establishments and car rental services associated with the airline.

Cathay Pacific members earn one Asia Mile for every 1,000 won ($0.76) spent and an additional 250 miles for purchases exceeding 300,000 won. Members can also buy prepaid gift cards to Shinsegae DF, via Cathay Pacific's online mall, using their miles. All passengers on Cathay flights to Korea, even those who are not Miles members, will receive shopping vouchers. Shinsegae DF said it is also exploring collaborations with other affiliates within the Shinsegae Group.

For Korea's third-largest duty-free operator, the partnership reflects an effort to adapt to the evolving landscape of post-pandemic travel. While Chinese group tourism saw a resurgence in August after a hiatus of more than six years, industry revenue has not spiked accordingly. Many players in the travel space still see individual travelers as the more important target.

According to a survey by the Ministry of Culture, Sports and Tourism, the proportion of individual foreign travelers in Korea has risen from 77.1 percent in 2019 to 85 percent in the third quarter of this year, while group travel has dropped from 15.1 percent to 9.2 percent over the same period.

Shinsegae DF aims to capture the attention of individual tourists, starting with those from regions like Hong Kong and Southeast Asia. The collaboration with Hong Kong-based Cathay Pacific is an opportunity to bring its substantial number of Asia Miles members to its stores.

“Our focus is on Asian customers initially, given the cultural and geographical differences with North American and European markets,” said Ryu Sin-yul, CEO of Shinsegae DF, at a press conference in central Seoul Tuesday. “However, we still value China as a crucial market and will pursue collaborations opportunistically in areas such as Chinese airlines and hotel chains.”

Cathay Pacific, highlighting the popularity of Korean culture in Hong Kong, sees the city as not only a cultural hub but also a gateway to the Greater Bay Area.

“Korean culture, including K-pop, K-movies and K-food, is all incredibly popular with Hong Kong consumers,” said Donald Morris, Cathay Pacific's country manager of Korea. “Hong Kong as the main international gateway to the Greater Bay Area means there's tremendous opportunity to tap into an affluent consumer base.”

Shinsegae DF expects this collaboration to bring an additional $16 million in annual revenue, and is aiming for 30 percent growth in the number of individual tourists using its duty-free shops next year.

Additionally, the company said it is contemplating overseas expansion, with “a focus on areas like China and Southeast Asia, pending the stabilization of the Incheon Airport Terminal 4 duty-free business.”

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]