EU arrivals duty and tax free ‘could take a 20-30% slice of airport DF&TR sales’

By Luke Barras-hill |

A sizeable untapped commercial opportunity exists for EU airports should legislators unlock the doors to duty and tax free arrivals shops, research suggests.

An independent *report from York Aviation commissioned by the European Travel Retail Confederation (ETRC) launched today (28 October) estimates that arrivals duty and tax free sales could make up 20-30% of total travel retail sales at EU airports (with the more likely figure at the bottom of the range).

Based on 2019 traffic levels, duty and tax free sales could produce an estimated €4.3 billion in gross value added (GVA) – a measurement used to calculate economic productivity – alongside supporting 41,500 jobs and generating €1.6 billion in tax revenues.

Nigel Keal, President, ETRC.

‘LEVELLING UP’ COMPETITION

Arrivals duty and tax free shops are already a common fixture in other parts of the world, including at important airports in non-EU countries in Europe such as Switzerland, Norway and Turkey.

However, current EU legislation would need to change as currently passengers who depart the bloc only are allowed to avail of tax and duty free purchases.

As such, ACI Europe and ETRC are pressing the European Union to review current rules to pave the way for passengers travelling from third countries (non-EU) to buy duty and tax free on arrival in EU airports.

The UK’s departure from the EU next year is expected to substantially lift the volume of non-EU passengers, providing a timely boost to the region’s major hubs as well as smaller airports.

Adjusted for the impacts of Covid-19 and the UK’s looming exit from the EU next year, the York Aviation assessment views an initial positive impact per million passenger of around €1.3 billion in GVA, 12,000 jobs and €475 million in tax revenues should tax and duty free arrivals shops start trading.

In turn, permitting duty and tax free shopping on arrival for passengers travelling from third countries – such as the UK following Brexit – to the EU will act to ‘level up’ competition between EU airports and their international counterparts, creating much-needed revenue and supporting employment at a critical time.

This was a central message relayed to TRBusiness and other trade media during a joint briefing held by ACI Europe and the ETRC today, during which York Aviation presented findings from the report.

Source: ETRC. Click to enlarge.

Nigel Keal, President of the ETRC which has been calling for the conversation on arrivals duty free to be placed firmly back on the table for many months now stated: “The introduction of EU arrivals duty and tax free shopping presents us with a great opportunity to renew the outdated approach to arrivals shopping in the EU.

“As allowances will remain the same, this proposal will simply give passengers another opportunity to avail of their duty and tax free allowance and to choose to support their local airport rather than buy abroad.

“Our members will be driving the biggest ever industry recovery effort in the coming years – allowing arrivals duty and tax free will greatly facilitate this.”

Source: ETRC. Click to enlarge.

Olivier Jankovec, Secretary General, ACI Europe added: “EU airports are currently facing the most difficult trading conditions in modern history and are urgently in need of government support.

“Given the unique role that airports play as economic gateways, it is imperative that all steps are taken to keep them open through these difficult times.

“EU airports are currently losing hundreds of millions of euros of potential commercial income to their non-EU counterparts each year. Arrivals duty and tax free will allow retail sales to be displaced from third countries back to the EU airport of arrival.”

Stay close to TRBusiness for a more comprehensive report…

*The Economic Impact of Arrivals Duty and Tax Free Shopping in the EU

Middle East

JEDCO launches multi-category tenders at KAIA T1

Jeddah Airports Company (JEDCO KSA) has issued a request for proposals for several...

International

TR Consumer Forum 2024: Ticket sales now open

TRBusiness is thrilled to announce that you can now book your tickets to the TR Consumer Forum...

International

Alcohol insights: Conversion up, spend down in Q4

Conversion of visitors in the alcohol category in duty free has risen to 54% in Q4 2023,...

image description

In the Magazine

TRBusiness Magazine is free to access. Read the latest issue now.

E-mail this link to a friend