Duty free for all: Airport retailers are exploiting a captive market

In the summer of 1999, some travellers were aghast to see that duty-free sales for journeys within the European Union had ended. Campaigners, led by Denmark, had successfully argued that it was absurd for member states to forgo the duty and tax on high-value goods just because a traveller took them from one EU location to another by air or sea.

Gone were anomalies such as the “butter boats” that shuttled around the Baltic offering free tickets to all, on the basis that the average passenger would rationally spend freely on tax-free dairy products, alcohol and tobacco.

The duty-free lobby warned that 100,000 travel jobs could be lost. In fact, the relentless expansion of intra-EU travel was unaffected, and the tendency for airports to turn themselves into shopping malls with a sideline in aviation continued unabated. The average passenger with several hours of “dwell time” to fill at an airport is quite likely to shop.

And, as The Independent has revealed, anyone whose destination lies beyond the EU could be paying over the odds. Travellers bound anywhere from Abu Dhabi to Zurich are not liable to pay VAT on anything bought “airside”. Yet some retailers are helping themselves to the 20 per cent margin that rightfully belongs to the passenger. On a £60 purchase, that amounts to £10 collected from the passenger but not passed on to the Chancellor.

Retailers such as Boots and Dixons may protest that offering different prices depending on the passenger’s destination would be complex and expensive. Yet they routinely scan boarding passes to enable them to calculate their tax liability. Since their systems are tuned to register who escapes VAT, they could and should offer a discount at the point of sale to anyone heading beyond the EU.