WHEN duty-free sales for passengers travelling within the European Union are abolished, UK airports will see millions of pounds instantly wiped off their profits.
Whether this happens on July 1 this year or in two-and-a-half years time, it will have a massive impact on airport operations, particularly those outside southeast England, which has a high percentage of flights to European destinations.
Airports operator BAA estimates that of the ú123m a year it earns from duty-free, the ú30m from passengers flying within the EU is revenue that will be lost.
As a result, up to 4,000 airport jobs could go and passengers will end up paying more for their flights because BAA is considering increasing landing charges to regain some of the deficit.
BAA campaign manager Liz Tooke said: “The loss of duty-free would have such a dramatic impact that we have been pressing hard for a two-and-a-half year reprieve.
“This would allow us to work with the Government and the European Commission in putting in a replacement regime.”
Regional airports say their business will be hit even harder by the loss of duty-free within Europe. While only a quarter of BAA’s duty-free sales are to passengers travelling within the EU, Manchester Airport said passengers bound for the continent make up 60% of its duty-free business.
It stands to lose ú17m a year when this is abolished.
Liverpool Airport, which is heavily dependent on EasyJet’s flights to the continent and Ryanair’s services to Ireland, said it will be one of the worst affected by the abolition of duty-free.
Commercial manager Robin Tudor said: “We have 160,000 passengers a year travelling to Dublin alone, so all the duty-free revenue we get from these people will disappear overnight.
“Hopefully passengers will still shop at the airport, which is why we are increasing our retail outlets.”
Manchester has invested heavily in its retail outlets and catering facilities in a bid to persuade passengers to continue to part with their money at the airport.
Even so, it is expecting this business to replace only 17% of the lost revenue, and it anticipates 700 jobs being lost under the duty-free axe.
Although BAA is considering increasing its landing charges, other UK airport operators say they have no plans to do likewise. Instead regional airports are looking at other ways to claw back lost revenue.
Norwich Airport deputy managing director Trevor Eady said that by imposing higher charges to airlines, regional airports would become uncompetitive and drive carriers away.
He said he would prefer to attract long-haul carriers to Norwich Airport in an attempt to bring in those passengers who are still eligible to buy duty-free goods.