Arrival duty free benefits outlined in new report on Turkey, Norway, Switzerland

By Luke Barras-hill |

The York Aviation report commissioned by the ETRC was presented on 16 November at a luncheon in Brussels held jointly by ETRC and ACI Europe.

A new report from York Aviation outlines how the maturity of arrivals duty free shop regimes across three non-EU countries has helped to bolster aviation incomes.

The report, commissioned by the European Travel Retail Confederation (ETRC) and launched alongside ACI Europe in Brussels last week, focuses on the growth and development of arrivals duty free shops in Norway, Switzerland and Turkey.

James Brass, Partner at York Aviation and report author, demonstrated the key roles played by arrival shops in providing additional commercial revenue to support investment and growth of aviation ecosystems and connectivity while serving travellers’ needs.

Arrivals duty free in Norway, for example, has grown at a compound average rate of +10% since launching in 2005 and by 2015 accounted for 59% of operator Avinor’s duty free sales.

Between 2005 and 2019, duty free sales rocketed 108%, ‘cementing their position as a source of income central to Avinor’s viability’, states the report.

At Oslo Airport, the largest and most profitable of Norway’s airports, arrivals duty free takes a 50% slice of all duty free income.

Elsewhere, the case studies considered evidence around common some objections to arrival duty free shops – namely their potential interference with domestic markets and risk of increasing smuggling.

Statistics from Norwegian Customs contained within the report suggests a ‘shallow upward trend’ in domestic alcohol and tobacco consumption since 2000, suggesting no adverse impact as a result of the introduction of arrivals duty free shops.

In turn, the volume of tobacco and alcohol seizures between 2012-2019 moderated at approximately 27,000 seizures per annum while on-arrival duty free sales for the same period rose sharply.

“There is nothing to suggest a correlation between seizures and arrivals shop sales,” asserted the report. “The Norwegian experience certainly indicates there is no evidence to suggest that the assertion is correct.”

A timely backdrop for EU discussion

The update comes as industry lobbyists reinforce arguments to Brussels policymakers around the benefits of potentially expanding tax and duty free on arrival to inbound passengers at EU airports.

This is within the context of an impact assessment recently launched by the EU Directorate-General on Taxation and Customs Union (DG TAXUD) on VAT rules applicable to the travel and tourism sector.

Available evidence presented to attendees did not appear to point to a correlation between the introduction of arrivals duty free shops and the consumption of relevant goods in domestic markets, with no resultantly adverse impact on government revenues. Rather, predominant competition exists with departure shops in origin countries. 

The EU Commission intends to present a legislative review during the course of 2023.

Julie Lassaigne, Secretary General, ETRC, said: “The report clearly shows that arrivals duty free is a proven business model that can deliver a reliable revenue stream to the travel ecosystem with wider positive impacts.

“As part of the ongoing EU initiative on the VAT rules applicable to travel and tourism sector, we call on the European Commission to propose necessary changes to allow arrivals duty free in the EU to support the resilience and competitiveness of EU aviation.”

James Brass, Partner at York Aviation and author of the new report (centre), demonstrated the importance of arrivals shops in stimulating non-aeronautical incomes while supporting investment and growth opportunities within aviation ecosystems.

Morgan Foulkes, Deputy Director General at ACI Europe, added: “The damage to European airports from Covid-19 has been unprecedented. Arrivals duty and tax free shopping is a cost-neutral measure for governments but one which could support the financial sustainability of our EU airports.

“Over 60 countries currently allow arrivals duty and tax free shopping, including all EEA countries. It is time to review EU legislation to bring EU airports in line with global practice.”


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