Last duty-free purchases to be made on London flight tonight

The 130 passengers on tonight's 9.35 p.m. Ryanair flight from Dublin to Stansted will make history as the last passengers flying from an Irish airport to another EU destination able to buy duty-free.

From tomorrow, the price of alcohol and cigarettes in airports and on ferries will almost double - and in some cases more than double - in price for EU-bound passengers.

In Aer Rianta's airports, prices on non-exciseable goods, such as perfume, beauty products and electrical goods, will not change. As with most other airports in the EU, the VAT on these will be absorbed by the airports themselves.

However, the most popular items - alcohol and tobacco - will be hardest hit. The fact that excise duty as well as the usual VAT applies to these would make absorbing the duties unsustainable. "It makes you realise just how much of a bargain people were getting," says Mr Frank O'Connell, commercial manager with Aer Rianta.

Airports across the EU are ad opting a similar approach. London's Heathrow, Gatwick and Stansted airports, which are run by the British Airports Authority, will absorb the VAT and so maintain the duty-free prices on items other than tobacco and alcohol. This will also be the case in Glasgow, Edinburgh, Aberdeen and Southampton airports.

Variations on this approach are also being taken at Amsterdam's Schiphol airport, Brussels, Milan, Verona and Barcelona airports. At Paris's Charles de Gaulle airport however, the full rates of VAT and excise will be added to prices across the board tomorrow. No changes are planned to the appearance of the duty-free shops at Irish airports. The signs proclaiming duty-free shopping will remain. The only change will be dual-labelling, where alcohol and tobacco lines will have one price displayed for passengers to, for example, New York, and another displayed for passengers to, say, Manchester. Cashiers will charge accordingly upon presentation of a customer's boarding pass.

A Dublin Airport spokeswoman was not sure how it would ensure New York-bound passengers were not lending the Manchester-bound passengers their boarding pass.

A comparison of Aer Rianta's duty-free prices with other EU airports carried out in May found Irish prices were consistently among the lowest, and always lower than either Heathrow's or Schiphol's. Since Ireland's excise and VAT duties are some of the highest in Europe, this is unlikely to remain so for alcohol and tobacco. However, passengers flying beyond the EU via an EU airport may buy duty-free in Ireland.

There will now be no limit on how much a customer may buy within the EU, and duty-free prices on non-exciseable goods will be available to anyone, even if flying from Dublin to Cork. On Stena Line, Irish Ferries and Swan sea-Cork ferries, excise and VAT will go on alcohol and tobacco - unless bought and consumed on board - and discounted prices will be offered on other lines.

Mr Eamonn Hewitt at Stena Line is predicting administrative chaos for ferry shop staff. "We will have to do about four stock-takes on each round trip," he says. Though a standard price for each item will be worked out for customers, staff will have to keep a scrupulous eye on where exactly the ferry is.

As the vessel leaves Ireland Irish excise duties and Irish VAT will apply. When it gets within 13 miles of Britain, Irish VAT and British excise duties will be in force. Then leaving Britain, British VAT and British excise duties apply until the ferry reaches 13 miles from the Irish coast when British VAT and Irish excise duties apply.

In the long term, the consensus appears to be that fare prices rises are inevitable and regional airports will struggle to survive at all.

Airport landing charges may have to rise to compensate for the loss in duty-free revenue. Dublin airport has not raised its landing charges since 1987 which, says Mr O'Connell, has been instrumental in keeping ticket prices down and increasing the range of airlines using Irish airports, thus increasing competition.

BAA, he points out, has received permission to raise its landing charges by 15 per cent, Copenhagen charges will rise 30 per cent and Irish ferry companies are predicting fare increases of 15 per cent. Regional airports such as Farranfore in Co Kerry, Knock in Co Mayo, and even Cork will find life harder, he continues.

While Shannon has a healthy throughput of US-bound passengers (55 per cent) who will still buy duty-free, 85 per cent of Dublin's passengers are EU-bound, as are 95 per cent of Cork's.

In February, the EU predicted 60,000 job losses across Europe as a result of the end of intra-EU duty-free. Dublin airport duty-free's 200 full-time staff will be safe, says Aer Rianta, though the estimated 200 non-permanent jobs cannot be guaranteed.

"Our priority has to be to sustain shopping as part of the travel experience to protect jobs," says Mr O'Connell, "but what is going to happen, no one can predict." Tomorrow, "we enter uncharted territory."

The new hike caused by the abolition of duty-free will add in some cases to the high prices for tobacco, wine and spirits in some EU countries. Ireland is already one of the most expensive for these products, regarded in some countries as luxuries, along with Finland and Sweden. The warmer Mediterranean countries have traditionally imposed fewer duties on these goods.