EU/UK. Industry campaigners have said that the push to introduce arrivals duty free in the EU and separately in the UK has made “positive progress” in recent months. Speakers representing the ETRC and UK Travel Retail Forum respectively addressed the issue today at the annual ETRC Business Forum, hosted virtually in partnership with TFWA (the event concludes tomorrow).
The ETRC launched a campaign last June to convince the European Commission and member states of the need for arrivals duty free, which would allow a “levelling up” with arrangements in other markets. It would also represent a new revenue stream for struggling airports.
ETRC Secretary General Julie Lassaigne said that arrivals is “a priority for ETRC in 2021” and said that momentum was building behind the push among national governments and in Brussels. “We have met the Commission to build momentum and are positive about progress to create legislation for arrivals duty free. It is a measure that will benefit the entire eco-system. We hope it will come sooner rather than later.”
Since the launch of an economic study in October, ETRC and its lobbyist partners have met regularly with the Commission. That report estimated that arrivals duty and tax free sales could make up an estimated 20% (perhaps rising to 30%) of total travel retail sales at EU airports.
Addressing the issue, Hume Brophy Managing Director John Hume said the opportunity was “a prize worth fighting for. Since Brexit there are 125 million more air passengers a year at EU airports that can buy duty free. There are many airports across the EU that would see the benefits, especially those smaller airports that are struggling financially. Arrivals duty free would be a support for these airports, one that would not cost governments any money.
“We have seen the Commission taking this issue much more seriously in the past six months. They do recognise that airports in the EU are at a competitive disadvantage. They know it works successfully in other parts of the world and they know there is an issue with struggling airports in the EU. Are they convinced? Not yet but they are engaged. They are still questioning the impact on domestic retail and the impact on EU health policy [linked to alcohol and tobacco sales -Ed] but we can answer these concerns.
“What will it come down to in the end? It is member states that will take this forward. If they can be convinced that arrivals duty free is a good thing, then the EC will move. That requires widening the debate across the 27 states and mobilising the industry to speak to and encourage governments.”
On the UK side, UKTRF Chair and ETRC Vice-President Aviation Affairs François Bourienne said there were encouraging signs about the possibility of introducing arrivals duty free.
He said: “In early January, now that Brexit has been finalised, government has launched a consultation asking for new economic ideas and our members have pitched the idea of arrivals duty free as a new business stream.
“We are also beginning a campaign with prominent MPs from the Conservative Party to support and be flag bearers to help introduce this business. We know already that travellers are taking advantage of duty free allowances on liquor & tobacco so with arrivals, this can create added value on the UK side. Ideally we could get this included in the next UK Budget in April though that is perhaps unlikely. If not, we would not want to wait a full year but instead have this legislated for by the Summer to take advantage of the return to travel. It would be a gift the government can give as they are looking for ideas to take advantage of Brexit, and it would not cost them a penny.”
Bourienne also updated delegates on the UK Treasury’s abolition of tax free sales and VAT rebates for outbound tourists. It means that tax free sales at UK airports were withdrawn for all outbound passengers from 1 January on goods other than liquor & tobacco. That includes the all-important fragrances & cosmetics category, as well as fashion, luxury and consumer technology. As reported, Heathrow Airport, Dufry and Global Blue mounted a joint challenge in November to the hugely controversial move.
Bourienne said: “The judicial review process will go to court in February. If the outcome is positive, it could force the government to re-run the industry consultation and even reconsider. If the review fails, we will have to examine other options.”
Other key issues addressed in this session included digital labelling, with the latest updates outlined by Julie Lassaigne, and the future of tobacco retailing, with input from Imperial Brands Head of Corporate & Legal Affairs – Global Duty Free & Export Tobias Baude.
*We will bring you more from the ETRC Business Forum soon.
