Major airports set to cushion impact of duty free’s demise

Date: 24/06/1999

By Simon Coss

MANY EU airports are planning to absorb most of the cost of the abolition of duty-free sales within the EU from next week, instead of passing on the increase to travellers.

Amsterdam's Schiphol Airport and Belgian Sky Shops, which runs the duty-free concessions at Brussels' Zaventem Airport, are among those which have already decided that they will effectively 'pay the duty' on all goods, except cigarettes and alcohol, which were previously tax-free.

"We will compensate for the new taxes so that articles can still be bought for the same price," said an airport spokeswoman, who explained that this would not apply to cigarettes and alcohol because the levels of duty on them were too high to make this viable.

Overall, the Union's airports and ferry companies seem to be well-prepared for imminent demise of duty free within the EU, even though they fought tooth and nail until the 11th hour to save the travel perk.

From next Thursday (1 July), people travelling from one EU member state to another will no longer be able to buy cigarettes, alcohol or other luxury goods tax-free, although the perk will still be available to those travelling to and from non-Union destinations.

The European Commission has long argued that duty free is an anomaly within the internal market and EU governments finally signed its death warrant at this month's Cologne summit after several months of last-minute procrastination.

The Union's duty free operators - the companies which profit from the sale of tax-free goods at airports and on ferry boats - have always insisted that abolition of the perk would cause massive job losses and stifle a highly productive industry. Yet now that the decision has been taken to end it, most do not actually seem particularly concerned about the future.

In Ireland, the industry appears to be gearing up for the future with relatively little trepidation, even though Aer Rianta, which is in charge of duty-free shops at Dublin Airport, was one of the prime movers behind the campaign to save the perk.

"We will be developing new facilities to accommodate tax-paid items," said company spokeswoman Siobhan Moore. This suggests that Dublin Airport will effectively evolve into a major out-of-town shopping complex with aeroplanes attached.

The British Airports Authority (BAA), which manages all the UK's major airports including London Heathrow, appears to be following the same approach. "The airport will still be the clever place to shop from July onwards," insisted BAA retail director Brian Colley.

It is not just the airports which are putting a brave face on the end of duty free. P&O/Stena, which run car ferries between the UK and France, is planning to take advantage of other distortions in the single market when tax-free shopping is abolished.

"We are looking to sell duty-paid goods on board our ships but will be looking to sell them at French rates, which are lower than those in the UK," said company spokeswoman Gail Eisteded.

This means passengers travelling from the UK will have to wait until their ferry enters French territorial waters before being able to stock up on cheap cigarettes and whisky.

That is because, under the new regime, companies selling goods on ferries or aircraft, and their customers in cases where the extra cost is passed on, will have to pay the duty levied either in the country of departure or the destination, depending on where the vessel is at a particular point on its journey. Value added tax will, however, always be charged at the rate in force in the country of departure for the whole trip.