UK Chancellor urged to authorise arrivals duty free shopping in the UK

By Andrew Pentol |

A cross-party group of over 60 MPs and Peers have written to UK Chancellor Rishi Sunak calling for the introduction of arrivals duty free shops in British airports, international rail and ferry terminals.

In the joint letter dated 24 March parliamentarians urged the UK Government “to help our travel sector flourish and take full advantage of the UK’s EU departure.”

As reported last July, the European Travel Retail Confederation (ETRC) is lobbying to secure arrivals duty free in the UK and EU. ETRC also pinpointed the topic as a priority for 2021 during its virtual Annual Business Forum in January.

The potential impact of arrivals duty free in the EU on businesses and the wider industry was assessed as part of the TRBusiness Global Industry Survey 2021, which included an individual question on the topic.

ARRIVALS LOBBYING EFFORTS

Sarah Branquinho, President, Duty Free World Council commented in her survey response: “The DFWC fully supports the [lobbying] efforts of ETRC and ACI and we have also been actively involved in making the case for the introduction of arrivals duty free shopping with ACI on a global level.

“Many countries around the world currently offer duty free on arrival and the EU is actually a bit of an outlier on this.

“We believe the case for arrivals shopping, levelling the playing field and the positive environmental impact, is very strong and hope it shall be positively received. It would provide a significant boost to our industry at a time it is really needed.”

A joint letter from parliamentarians calling for the introduction of arrivals duty free shopping at British airports, international rail and ferry terminals has been sent to UK Chancellor Rishi Sunak.

Julián Díaz, CEO, Dufry Group also talked up the benefits of arrivals duty free shopping: “Arrival duty free is for sure a positive development and this is increasingly recognised around the world.

“The arrival duty free concept is much more than just an additional shop after landing, as it can drive the implementation of different customer services. This can increase convenience for customers, which in retail always plays an important role.”

The European Travel Retail Confederation outlined the benefits of arrivals duty free shopping in the European Union last year.

The aforementioned letter to government stated that “this easy to implement, cost-neutral policy will drive forward investment through capital expenditure, create jobs and according to independent research, increase passenger spend by between 20 – 30%.”

Organised by the Chair of the Future Aviation All-Party Parliamentary Group, Henry Smith MP the letter has received support from the likes of Sir Graham Brady MP, Chair of the powerful 1922 Committee, Lord Davies, former Government Aviation Champion in Theresa May’s Government and both the Liberal Democrat and DUP official Treasury Spokesperson.

Francois Bourienne, Chair of the UK Travel Retail Forum.

Henry Smith MP commented: “This joint letter showcases the strength of political feeling on this matter. The UK’s travel sector is vital to our economic success which our recovery will rely on.

“We need to ensure it is in a position to support a global Britain, deliver long-term and sustainable jobs to the UK and play its part in the safe and sustainable recovery of international travel. The introduction of duty free on arrival shops delivers that helping hand.”

Fundamental to this initiative, according to the authors is that arrival shops will not take sales away from the UK’s high street and deprive UK businesses of sales.

Instead, they will repatriate sales that currently take place at the point of departure — mostly in Europe. Regardless of whether this policy is implemented, these products will still be purchased.

The authors added: “Duty free on arrival shops will ensure the economic benefits are realised in the UK. This is good news for our travel industry and great news for UK plc.”

Francois Bourienne, Chair of the UK Travel Retail Forum remarked: “Duty free on arrival shops should form an integral part of the Government’s support package for our ailing travel industry. The beauty of this initiative is that it will not cost the Government a penny.

“More than tax breaks or grants, the government should look to self-sustaining measures, such as duty free on arrival shops, which are mindful of the fiscal restraints on our economy and allow the industry to stand on its own two feet and flourish. With the European Union considering such an initiative the UK must follow suit to remain competitive.”

A comprehensive list of frequently asked questions (see below) relating to the possible introduction of UK arrival duty free shops were included in the letter to government.

Frequently Asked Questions: Duty Free Arrival Stores

Will duty free on arrival stores take sales away from the UK high street?

No. The introduction of duty free on arrivals stores will not have a material impact on domestic retail sales in the UK, as the sales made at arrivals stores are not sales that are already taking place in the UK economy.

Rather, arrivals store sales would represent a repatriation of sales that currently take place at the point of departure — mostly likely in the EU in the majority. Regardless of whether this policy is implemented, these products will still be purchased.

We view the concept of UK arrivals stores as very much an opportunity to capture duty free sales already taking place abroad and ensure the economic benefit of those sales are realised in the UK.

Will Duty free on arrival stores prevent the UK from meeting certain health objectives?

No. Arrivals duty free does not lead to increased sales of products, rather it is about where the sale takes place. It should also be noted that the passenger entering the UK is still subject to the same limits of goods they can carry with them as duty free purchases.

How can arrivals duty free help meet environmental goals?

By reducing the weight carried on board an aircraft, ferry or train, duty free arrivals shops also contribute to environmental goals of reducing aviation emissions. Arrivals duty free provides passengers with a choice to purchase at the point of departure and carry the item(s) with them on their flight, or to wait until they arrive at their destination and make their duty free purchases then. Though a small gain, the path to cleaner aviation is through every % point reduction.

Will arrivals duty free place a major burden on customs officers at GB airports?

No. The amount of products that can be carried by passengers arriving from a third country will remain the same. This means there is no change to the surveillance and enforcement role of customs officers. It may even be of assistance to the customs officers as the shopping carried by the passengers will be visible as it is carried in shopping bags from the arrivals store, rather than having been placed into larger bags and luggage.

Won’t this only help larger airports?

No. There is a clear benefit for regional airports, particularly those that feed traffic to and from international hubs to a various region. Retail sales can account for as much as 40% of revenue in some regional airports — highlighting the critical role retail plays in supporting regional connectivity in the UK. Arrival duty free stores actively support this ecosystem and help deliver on further growth.

Would the introduction of arrivals duty free impact on the tax generation in the country where it is based?

No. Purchases at arrivals duty free have no impact on domestic sales of products — these sales are displaced from airport duty free stores outside Great Britain. There is no impact on government tax revenue, and no increase in the amount of products entering the market as travellers’ duty free allowances remain the same.

Arrivals duty free is ‘Cost Neutral for Governments’. In fact, arrivals duty free will contribute to boost revenues for governments by creating employment and generating corporate taxes.

How quickly can arrivals shops be opened?

This is dependent upon the space available and layout of the airport in question. Creating new retail areas at airports in Great Britain may trigger significant capital expenditure for building works as infrastructure is adapted to take advantage of the new opportunity, creating the opportunity for new local investment and additional jobs.

The Americas

Details emerge of JFK T1 commercial programme and duty free tender

Qualified travel retail operators are being invited to participate in a request for proposals...

Europe

Mondelez WTR launches Win a Diamond pop-up with Lagardère at CDG

Mondelez World Travel Retail (WTR) has unveiled an enhanced iteration of its Win a Diamond...

Middle East

JEDCO launches multi-category tenders at KAIA T1

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

image description

In the Magazine

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

E-mail this link to a friend