Industry bodies the Airports Council International Europe (ACI Europe) and the European Travel Retail Confederation (ETRC) are calling on the European Union to review current legislation to allow passengers traveling from third countries to buy duty and tax free on arrival in EU airports.
An independent report commissioned by ETRC from York Aviation highlights the potential economic benefit achievable through the introduction of arrivals duty and tax free shopping at EU airports. Based on 2019 traffic figures, the analysis found that duty and tax free arrival shops would have generated around €4.3bn (US$5bn) in gross value added (GVA), supported 41,500 jobs and generated €1.6bn (US$1.87bn) in tax revenues.
The report notes that these benefits are achievable by realizing a commercial opportunity that remains entirely untapped, and estimates that arrivals duty and tax free sales could make up 20% to 30% of total travel retail sales at EU airports. Furthermore, as the UK is scheduled to leave the EU on January 1, 2021, the numbers of non-EU passengers will increase substantially, and many smaller airports would see the benefits from arrivals duty free.
Recognizing the impact of Covid-19 on air traffic, the report draws the conclusion of an initial impact per million passenger of around €1.3bn (US$1.52bn) in GVA, 12,100 jobs and €475m (US$555m) million in tax revenues, rising to €3.5bn (US$4.1bn) in GVA, 33,700 jobs and €1.3bn (US$1.52bn) in tax revenues.
Arrivals duty and tax free shops are commonplace in most airports around the world, including all EEA countries (Norway, Iceland and Switzerland) where it is very popular with arriving passengers. But under current EU legislation, duty and tax free sales are only allowed to passengers ‘leaving’ the European Union.
The ACI suggests that allowing duty and tax free shopping on arrival for passengers traveling from third countries to the EU will restore competition for EU airports vis-a-vis their international counterparts, by creating much-needed revenue and supporting employment at EU airports.
ACI Europe director general Olivier Jankovec stated, “EU airports are currently facing the most difficult trading conditions in modern history and are urgently in need of government support. Given the unique role that airports play as economic gateways, it is imperative that all steps are taken to keep them open through these difficult times.
“EU airports are currently losing hundreds of millions of euros of potential commercial income to their non-EU counterparts each year. Arrivals duty and tax free will allow retail sales to be displaced from third countries back to the EU airport of arrival.”