NEW YORK -- Duty-free purchases for travelers within the 15-country
European Union will end July 30, when the 1991 European Commission
ruling that eliminated the sales finally takes effect.
The demise of the $7 billion business, which covers sales at
airports and ferry terminals as a well as on airplanes and ferries
traveling within the E.U., will have little impact on American
travelers because the ruling applies only to intra-European
Travelers from non-E.U. countries such as the U.S. still can
make duty-free purchases of popular items such as cigarettes,
alcohol and perfume in the E.U. as long as they are on their way to
or from a destination outside the union.
For example, a traveler from Paris to New York can show his
ticket and buy duty-free liquor at the airport before departure,
but from Frankfurt, Germany, to Paris, the liquor's airport price
will include all applicable VAT and excise taxes.
The E.U. countries are Austria, Belgium, Denmark, Finland,
France, Germany, Great Britain, Greece, Holland, Ireland, Sweden,
Italy, Luxembourg, Portugal and Spain. The end of duty-free
shopping is expected to have a dramatic impact on regional
airports, airlines and ferries that rely heavily on these sales to
According to a 1996 report published by the Campaign to Save
Duty-Free in London, airports accounted for 49% of all duty-free
sales, followed by ferries with 37% and airlines with 14%.
A spokeswoman for British Airways in London said that many
regional airports likely will increase their landing fees to
airlines by as much as 15%. "This increase could potentially be
passed on to travelers, but we're waiting to see what the airports
do before we make any decisions," she said.
The British Airport Authority, which runs Heathrow, Gatwick and
Stansted airports outside London as well as Glasgow and Edinburgh
airports in Scotland, received permission from the Civil Aviation
Authority to increase its landing fees to airlines by $88.5 million
starting this July, an authority spokeswoman said.
"This could result in additional 70 pence ($1.13) per ticket
charge, if that's how the airlines deal with it," she said. The
authority expects the elimination of duty-free sales will cost it
$30 million to $40 million in the first 12 months, the spokeswoman
Like many other airports in Europe, however, the British Airport
Authority plans to diversify its shopping outlets with specialty
shops to make them a "choice stop for passengers" even without
One innovative marketing approach was taken by Amsterdam's
Schipol Airport and its shopkeepers, which announced they will pay
the value-added tax on all items except alcohol and tobacco bought
by passengers traveling within the E.U. The decision will cost
Schipol as much as $40 million a year, according to an airport
spokeswoman, who said alcohol and tobacco account for 13% of all
Ferry lines might have fewer options. A spokeswoman for
London-based P&O Stena ferry line, which operates 35 roundtrips
daily across the English Channel between between Dover, England,
and Calais, France, said duty-free sales accounted for one-third of
the company's revenue.
The firm raised its prices this year by 25% in preparation for
the end of duty-free shopping, the spokeswoman said, but prices
were still below 1994, when the Eurotunnel between France and
England began giving cross-Channel ferries stiff competition.
Cross-channel ferries as well as ferries that travel in waters
off of Scandinavia and Germany are often referred to as "booze
cruises" because of the business they do in alcohol sales. Tax-free
liquor and cigarettes still can be purchased aboard such cruises
and on airplanes but only for on-board consumption.
Meanwhile, two Scandinavian ferry lines, DFDS Seaways of
Copenhagen, Denmark, and Silja Line of Helsinki, Finland, changed
their routes to include stops in non-E.U. ports such as Oslo,
Norway, and Tallinn, Estonia, in order to continue their duty-free
sales on most cruises.
The decision to end duty-free sales within the E.U. was made
"because such sales were an anomaly in what is supposed to be a
single market," said a spokesman for the European Commission here.
The eight-year delay in scrapping duty-free sales was designed to
allow E.U. countries time to prepare for the economic impact of the
"These [duty-free] sales created unfair competition for all of
the nonduty-free stores. It is expected that jobs and revenue lost
with duty-free's end will be made up for in the taxes gained and
the stimulation of the normal retail sector," he said.