UK Chancellor Jeremy Hunt is facing calls to allow Norway-style duty-free shopping on arrival at Aberdeen Airport in a bid to boost sales and develop new routes.
It follows reports of “incredible successes” there and in Switzerland.
The switch in focus would allow passengers to wait until they arrive in the UK to make their VAT-free purchases.
Emma Small, retail account manager at Aberdeen International Airport, said the move would deliver a “much-needed boost” to UK airports that are losing sales to overseas airports.
The airport would reinvest newly generated cash in the development of new international routes.
Ms Small said: “This has the potential to improve infrastructure and connectivity in regional areas, in turn making them more attractive to tourists and international passengers.”
She said “many” regional airports rely on areas such as duty-free and retail sales for up to 40% of their revenue.
Gordon MP Richard Thomson, whose constituency includes the airport, says the policy will “drive forward capital investment, create jobs, and potentially increase passenger spending by 20-30%”.
European examples
Research carried out by York Aviation, a consultancy firm for the aviation industry, looked at the introduction of duty-free arrival stores in Norway and Switzerland.
Norway introduced the shops in 2005 and saw a 37 percentage point increase in arrivals duty-free sales – from 22% in 2005 to 59% in 2015.
Switzerland, where the shops were first set up in 2011, saw less of a boost. Arrivals duty free sales increased there from 22% in 2012 to a peak of 27% in 2017.
The research, published in October, states “convenience” boosts spending in arrivals duty free shops in Switzerland.
The report states: “Travellers that would normally purchase duty-free on board or carry purchases from the point of departure, can now easily purchase upon arrival at the relevant Swiss airport without carrying goods onboard for the entire journey.”
The research looks at the impact arrivals duty-free in Norway is having on Aberdeen Airport as a case study.
This clearly demonstrates that arrivals shops compete primarily with departures shops.
Research report by York Aviation.
This shows there was an “immediate and dramatic impact” on sales to Norwegian-bound passengers in the departure shops at Aberdeen Airport.
The report states: “Information from the operating retailer suggests sales to this group fell by 40% and ultimately never recovered.
“This clearly demonstrates that arrivals shops compete primarily with departures shops.”
Impact on domestic economy
One of the criticisms levelled at arrivals shops is they will take away sales from domestic retailers and have a negative impact on the domestic economy and reduce government revenues.
The research says available evidence “does not suggest there is any link between the advent of arrivals duty-free shops and consumption of relevant goods in domestic markets”.
It concludes there is, therefore “no discernible impact of government revenues” and that instead, the primary competitor is with departure shops in country of departure.
Mr Thomson wrote to the UK Government and asked if an assessment has been made on the “potential benefits”.
In response, Treasury Minister James Cartlidge said there are “no plans to introduce such a scheme” but added the government “keeps all taxes under review”.
He added: “Duty-free on arrival, which would apply to inbound passengers, would impose additional pressure on the public finances, to which excise duty makes a significant contribution.
“Any loss in tax revenue would have to be balanced by a reduction in public spending, increased borrowing or increased taxation elsewhere.”
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