On March 16th, 1951, the first duty-free airport shop in the world, selling spirits as well as cigarettes to passengers, opened in the transit lounge at Shannon Airport in Co Clare.
The prices of spirits were about a third of those outside the airport with a bottle of Irish whiskey selling for 10s 6d in contrast to the duty-paid price of 30s (in today’s money it’s roughly 66c versus €1.90).
The shop was operated by a sales and catering operation owned by Brendan O’Regan under a contract with the Department of Industry and Commerce since 1942.
The contract, which was initially at the flying boat terminal at Foynes, and after the war at Shannon, gave O’Regan the franchise for all catering and retail sales at the airports.
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O’Regan had initially set up a tiny kiosk in Shannon in January 1946 with a limited offering, including lace from the Good Shepherd convent in Limerick, the Irish Press newspaper and fully taxed whiskey.
In 1947, Shannon, like many other airports and seaports around the world, became what was known as a free airport under the Customs-Free Airport Act, 1947.
This allowed goods to be imported and stored, traded or processed and exported without taxation. The latter exemption operated only providing the goods were not entering the country in which the free airport was located.
In 1951 the Act seemed to be a failure as nothing was happening in Shannon. Future taoiseach Liam Cosgrave, then parliamentary secretary to the minister for industry and commerce, stated in the Dáil that “despite wide publicity in Europe and the United States, there was no demand for customs-free airport facilities or to use the airport as a clearing centre for freight. On that basis, it was not proposed to undertake the erection of warehouses.”
Seán Lemass had missed the opportunity presented by duty-free shopping four years earlier when putting through the legislation to create new opportunities in Shannon for trading or industrial businesses rather than improved facilities for air passengers.
He set out reasons why it was not going to be permitted: “Within the airport area, goods which are subject to duty will not be allowed to be sold, except that duty has been paid on them ... you could not have a situation where our whiskey and cigarettes could be sold at cheaper prices inside the airport than outside it. I do not think the traders of Limerick would do very much business.”
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Selling duty-free goods at an airport was an idea that Revenue officials in Ireland and worldwide were against. They felt it would much greater customs and police staff to prevent smuggling of duty-free goods out of the airport.
O’Regan made a case to the coalition government of John A Costello at the height of Ireland’s stagnating economy that the revenue forgone would be tiny compared with the economic and employment growth that having a duty-free shop in Shannon would bring.
His eureka moment occurred on his voyage back from his 1950 study tour of the US. “On the SS America ... I saw the shop that was selling duty free goods and my brain said to me: ‘If they can do it when you are crossing the sea in a boat, you can surely be able to do [it] when you land for the first time.’
“One of the strongest arguments I was able to use was that Shannon was in competition with the SS America and therefore it made no sense not to compete with it in their shops.”
He also argued that a duty-free shop would increase tourism revenue, give passengers and airlines reasons to travel through the airport, and create awareness of local goods, such as Irish whiskey, in foreign markets.
An important ally for O’Regan was the US Marshall aid team, which backed the idea strongly because it was trying to get the Irish government to do something to create a viable international tourism industry.
It issued public statements suggesting a duty-free shop should include watches and jewellery and at one stage threatened to cut off Marshall aid if progress was not made.
In June 1950 the cabinet accepted a recommendation by Costello to provide for the sale of duty-free goods “to passengers desiring last-minute presents of articles such as perfumes, whiskey, gin, etc”.
Despite lobbying by the Irish jewellers’ association, as well as delays by the Revenue Commissioners, who insisted a separate new shop for duty-free goods had to be built, and thrice-daily stock checks made, the shop opened on March 16th.
Shannon had the only duty-free airport shop in the world for the next seven years, when Schipol in Amsterdam became the second.
With prices of many expensive goods such as cameras and jewellery being 80 per cent below normal retail prices, Shannon duty free became known worldwide, featuring twice in Time magazine.
Airlines laid on routes so their passengers could enjoy the duty-free experience.
Perhaps one of the greatest impacts the Shannon duty-free shop was to make was in relation to its role in the setting up of the duty-free operation at Dubai airport.
O’Regan described Dubai duty free as “the thing I am most proud of in a world sense in showing what we were trying to do at Shannon”.
Its development was led by the late Colm McLoughlin, one of the original 10-man Aer Rianta International team from Shannon.
Now part of State-owned DAA, Aer Rianta itself has become a major player globally with about 3,000 employees working in operations across 25 cities in 11 countries. All a legacy of O’Regan’s work in pushing for duty free at Shannon.
Brian O’Connell is the author of Brendan O’Regan: Irish Innovator, Visionary and Peacemaker
