The campaign which many European airports have launched to continue duty free selling beyond 1999 is of particular importance to Ireland. The sheer amount of space devoted to retailing at our airports demonstrates vividly how important duty free income, is to Aer Rianta, the airports' authority for Dublin, Shannon and Cork. Retailing - the bulk of it duty free sales - accounted last year for £74.5 million out of Aer Rianta's total income of £212.5 million. Its chairman, Mr Noel Hanlon, said recently the plan by the EU to abolish duty free between the member states in 1999 would effectively reduce turnover and profitability in Aer Rianta's three duty free shops in Ireland by up to 75 per cent. A drop in income of this magnitude would lead inevitably to higher handling charges to the airlines which would lead, no less inevitably, to higher air fares.
The welcome downward pressure on air fares has brought about a major improvement in the quality of life as Irish people can contemplate the prospect of leisure travel more frequently than ever before. The surge in inward tourism, which has brought such benefits to the economy, has been fuelled in no small measure by the cheaper cost of access to our island. But it is not just Aer Rianta that would be affected. Ryanair has revealed that it makes 80p per passenger carried and "a fair proportion" of that derives from in flight duty free sales. These are indeed fragile economics when an airline makes 80p per passenger. Because of its low cost base, Ryanair can show a profit but it could ill afford to lose "a fair proportion" of 80D.
Traditionally, Aer Lingus has not bothered very much with in flight duty free selling on its routes to the UK and Continental Europe. It concentrates on its in flight service compared with, say, the very basic Ryanair product. However, in recent times Aer Lingus, too, has embraced the idea that in flight duty free sales are a source of revenue and profit that should not be ignored. Because of the longer journey times, duty free selling is ideally suited to the car ferries. Duty free revenue is an essential part of the economics of Irish Ferries and Stena Line. Its loss would drive up the cost of an Irish Sea journey just as certainly as it would lead to higher air fares.
Brussels argues that duty free is a distortion of trade. Of course it is, but it is a perfectly harmless one. Most people look forward to a bit of duty free shopping as part of the pleasure of travel. Why deny them? There may be some loss to EU exchequers, but if there is it is marginal. There is no evidence that duty free sales supplant duty paid sales. Duty free sales are usually additional purchases and often purchases of premium goods which at ordinary retail level would be out of financial reach. The manufacturers of these premium products would see their sales drop. That would not benefit the workers at Waterford Crystal or the workers at Irish Distillers who produce Midleton Rare. There is no really compelling case for abolishing duty free within Europe unless one is fixated with the neatness of things like a uniform curvature for bananas. This is the kind of thing that gives the Brussels bureaucrats a bad name.