The UK Travel Retail Forum (UKTRF) has reminded government ministers of the ‘immense’ economic potential of non-aeronautical revenue streams such as duty free and travel retail to UK airports.
Comments from the trade association surfaced today (26 September) after it emerged that Doncaster Sheffield Airport (DSA) is set to close.
Airport owner the Peel Group confirmed in a statement that DSA would begin ‘winding down’ aviation services in the week commencing Monday 31 October.
Local authority leaders had offered a proposal on Friday (23 September) to fund DSA’s operating losses through the public purse until 31 October 2023.
But the Group said in the statement on its website that ‘no tangible proposals’ had been received on the ownership of the airport, or which address ‘the fundamental lack of financial viability’.
It cited the high fixed costs of running safe, regulated operations coupled with the material reduction in prospective future aviation income streams.
Reacting to the development, Nigel Keal, Chair, UKTRF said non-aeronautical revenue such as duty free and travel retail can be ‘immense’ as airports up and down the country continue to grabble with the devastating impact on passenger volumes due to the Covid-19 pandemic.
MAG ‘guarantees’ job interviews
“For smaller regional airports like Doncaster, every penny of revenue is important,” he explained. “For some airports, duty free and travel retail sales can account for as much as 35% of total revenue.
“And, independent economic studies on the potential of arrivals duty free have concluded they could contribute new sales equivalent to 20-30 per cent of the outbound duty free market, or approximately £100 million each year in new sales.”
Recent polling commissioned by UKTRF revealed that more than half of Britons would be in favour of duty free allowances being extended to arrivals shops at airports, ports and railway stations.
As reported, the campaign received strong backing from MPs during an event in Parliament in July.
But the Treasury under the former Conservative Party administration told TRBusiness at the time that introducing duty free on arrival ‘could undermine the UK high street and run counter to public health objectives, as there may be more opportunity for passengers to bring in alcohol and tobacco products over their allowances, with the relevant taxes and duties unaccounted for’.
British travellers to the EU were granted duty free tobacco and alcohol allowances from January 2021, but tax free sales at airports and the VAT Retail Export Scheme were simultaneously ended in a hammer blow for the sector.
Last week, new Chancellor Kwasi Kwarteng reversed the decision taken by his previous incumbent Rishi Sunak by announcing the revival of tax free shopping for overseas travellers in a bid to boost the country’s retail sector.
“We welcome the recent comments of the Prime Minister on the importance of regional airports to economic growth, and the need to protect them,” added Keal. “In addition to the government’s previously announced intention to return tax free shopping, which we welcome, a simple step to support our airports would be to introduce duty free stores for arriving international passengers.
“These simple but powerful policy concepts can be implemented at next to no cost, and will ensure our airports can compete with their counterparts in the European Union and further afield.”
A Manchester Airports Group spokesperson said today that the airports group would offer all affected staff at DSA a guaranteed interview for vacancies across East Midlands, Stansted and Manchester Airports.
According to statistics from aviation analytics firm Cirium, Doncaster Sheffield Airport was the 26th biggest in the UK by share of departing flights in 2019 with 4,609 departures.
This equated to nearly 750,000 airline seats, the majority of which were occupied by Wizz Air and (formerly) Flybe.
For more on the campaign for duty and tax free on arrival, watch out for the TRBusiness October edition. This will be available digitally, and in print from the press racks at the TFWA World Exhibition & Conference in Cannes (2-6 October).