Tax free shopping, arrivals duty free, commercial trading and a laudable award’s win were at the heart of conversation when TRBusiness caught up with Fraser Brown, Retail Director, Heathrow Airport during the recent TFWA World Exhibition & Conference in Cannes.
During a video interview (click below to view)*, Brown touches on the airport’s recent commercial performance, as the hub edges closer to its pre-pandemic passenger traffic level of 80.9 million.
Brown spoke about a healthy H1 for the commercial estate he oversees, as traffic-serving flights to China and India, for example, continue to strengthen.
According to Brown, over half of the flights from Europe to Mainland China now originate from Heathrow.
However, the second half of 2023 has been “less strong”, according to Brown, with parts of the retail portfolio underperforming such as the critical luxury and beauty divisions, which continue to be affected by the removal of the UK tax free sales mechanism.
‘Time for talking on tax free is over’
As reported by this publication for some time, Heathrow has been arguing vociferously for the restoration of VAT-free sales on airside purchases after its cessation (except liquor and tobacco) in 2021.
“The feedback from our consumers, the passengers going through our airport, through the retailers and the brands, is that they are comparing prices and not liking what they are seeing,” said Brown. “They are voting with their wallets or purses; that can’t continue.”
At the TR Consumer Forum in June, Brown branded the government’s decision on tax free as ‘an act of economic vandalism’.
A Parliament Committee hearing this month heard from the Association of International Retail, which suggested the government has directly lost £200m since the the removal of tax free shopping (the VAT Retail Export Scheme and Extra-Statutory Concession on Airside Purchases).
This is in addition to an estimated £1.5 billion in lost spend by retailers as tourists elect to shop in other destinations.
“The time for talking on this subject is over; the actions of consumers are clear and the actions we need from the British government and the response to that is to reinstate tax free shopping at ports and airports in the UK and on the High Street.”
In a dose of good news for Heathrow during Cannes week, Brown’s team was announced as the winner of the ‘Best Airport Commercial Promotion 2023’ for the Hacienda Patrόn: Heathrow Terminal 5 activation at the consumer-voted Global Travel Retail Awards.
Reacting to the awards win and the consumer-voted element of the Travel Retail Awards judging process, Brown commented: “It is those consumers that really matter.
“They are the ones that pay the wages, whether it be airport operators and concession fees for retailers, for brands, and for us to be awarded as a ‘quaternity’ with our partner Avolta, Bacardi and our media partner JCDecaux for the best consumer promotion with Patrόn at T5 last year is fabulous. Sometimes it’s validation for industry; in this case it’s validation from consumers.”
In a statement issued before today’s Autumn statement [stay close to TRBusiness.com for reporting on the developments], the airport’s Chief Financial Officer Javier Echave has called on Chancellor Jeremy Hunt and HM Treasury to boost tourism and international spending by introducing an internationally competitive tax free shopping incentive for overseas visitors to ensure the UK competes on a level playing field with the rest of the world.
*Since this interview was conducted, Heathrow has adjusted its passenger traffic forecast, from an earlier prediction of 70-78 million to just over 79 million.