Northern Ireland’s three major airports in tandem with the UK Travel Retail Forum (UKTRF), are calling on the British government and European Commission (EC) to restore duty free following the agreement of the Windsor Framework earlier this year.
The deal – intended to safeguard the place of Northern Ireland in the UK – was inked in February and hailed as a breakthrough in negotiations with the European Union (EU) concerning discussions around the Northern Ireland Protocol.
But the absence of duty free for Northern Ireland travellers to the EU has been slammed by Belfast International Airport Managing Director, Graham Keddie, as “simply indefensible” with the chief adding for good measure the situation was the “worst of both worlds.”
Far from the rosy picture painted by politicians at the time of the deal’s signing, the reality is the Province is disadvantaged by now having the only airports in Europe without duty free facilities.
Loss of £5m in annual regional GVA
The inability of passengers to purchase duty free goods when travelling to either GB or the EU, is estimated to result in annual losses of £5m ($6.4m) in regional Gross Value Added, as well as denying a showcase to Northern Ireland food and drink companies.
British Prime Minister, Rishi Sunak, hailed the Windsor Framework at its inauguration, but the three major Northern Ireland airports of Belfast International, Belfast City and the City of Derry have now launched a concerted effort to ask for the implementation of duty free shopping.
The UK formally left the EU at the end of the transition period on 31 December, 2020 and from January, 2021, duty free shopping from British airports was extended to include EU destinations.
However, at that time it was not extended to Northern Ireland’s airports due to on-going discussions with the EU concerning the implementation of the Northern Ireland Protocol.
The three airports and UKTRF jointly point out non-aeronautical revenue can account for as much as 40% of the total revenue and smaller, regional sites can be particularly sensitive to the perk, as it supports reinvestment, capital expenditure and permits new route development.
The issue is also having a knock-on effect on Northern Ireland’s growing food and drink sector, maintains the consortium, as the absence of duty free facilities closes potential markets for the goods.
The grouping adds the return of duty free facilities to Northern Ireland’s airports would put them on an equal footing with others in the UK and deliver “real economic benefits” in terms of income generated, job creation and improved connectivity due to potential additional flights between Northern Ireland and EU countries, as well as boosting the food and drink sector.
However, HM Treasury (HMT) has hit back at the request, insisting the return of duty free would threaten the Belfast Good Friday Agreement and result in loss of income to the Exchequer.
An HMT spokesperson told TR Business: “The government is committed to preserving frictionless movement of people and goods between Northern Ireland and Ireland.
“Allowing duty-free shopping between the two would require introducing border controls between Northern Ireland and Ireland, which undermines the Belfast Good Friday Agreement. It could also lead to significant revenue loss for both the UK and Ireland.”
Return of duty free “incredibly popular”
The three Northern Ireland airports and the wider travel retail industry are calling on the UK government and the EC to use the mechanisms under the Trade and Cooperation Agreement (TCA), as well as the Windsor Framework to find a solution to the issue.
UKTRF chairperson Nigel Keal, who is coordinating the call to the UK government and EC, said: “The return of duty free post-Brexit has proved incredibly popular with consumers, with overseas retailers seeing significant increases in sales of duty free goods to departing UK passengers.
“This has been a crucial financial support as the aviation and travel retail sectors recover from the pandemic. Preventing airports and businesses in Northern Ireland from accessing this revenue stream is unfair. It puts them at a competitive disadvantage to the rest of the UK and to the rest of Europe.
“The travel retail industry is calling on the Westminster government and the EU Commission to work together to level the playing field and bring the rules on duty free at Northern Irish airports in line with rules at their British and European counterparts.”
For his part, Keddie added: “It is critical the UK government and EU move quickly to restore balance, equality and fairness for the people of Northern Ireland as we are currently left with the worst of both worlds.
“We have raised this matter directly with HM Treasury, the Cabinet Office and the Northern Ireland Office as well as our local political parties. It is simply indefensible the millions of passengers travelling through our airports are placed at such a significant disadvantage to those travelling through GB or RoI airports.
“This is costing millions of pounds in lost sales and is impacting employment and investment opportunities. We urge the UK government and EU to sort this issue out as a matter of urgency as there can be no credible or justifiable reason for not doing so.”
City of Derry Airport MD, Steve Frazer noted the three airports’ combined growth had “slowed significantly,” while also raising the issue of other airports on the island of Ireland benefitting from zero air passenger duty (APD), adding to the impression of an “uneven playing field.”