How will the banning of the Duty Free Trade in 1999 affect airport ads?

It is possible, some say, that the ending of duty free could stimulate a greater demand for airport ads. Can it be true, Richard Cook asks

It is possible, some say, that the ending of duty free could stimulate

a greater demand for airport ads. Can it be true, Richard Cook asks



Next year the oldest duty free airport shop in the world, at Shannon in

Ireland, will celebrate its 50th birthday. It might be well advised to

enjoy the anniversary while it can. Eighteen months later, according to

a decision taken by EU finance chiefs back in 1992, the dollars 5

billion European duty-free business will abruptly cease to exist. D-day

for retailers, manufacturers and their advertising agencies is midnight

on 30 June, 1999. After that, duty free will still be available to

passengers heading out of the EU, but not to the estimated half of all

European travellers whose destinations lie within the union.



To get an idea of what this might mean, you have to consider the

numbers. In the UK alone, according to the airport licensee, BAA, which

operates all except Manchester and Luton of the largest UK airports,

every single departing passenger spends an average of pounds 45.74 in

the duty-free shops and at the tax-free outlets that will also be

affected by the ban. A bottle of whisky is sold every six seconds in

duty free in this country.



A million gallons of wine and spirits are sold every year at Heathrow

alone, while a quarter of all film dispensed by Dixons is sold through

its airport stores.



For licensees such as BAA the effects of the proposed ban will be

painful enough. The operator estimates that even with the rebates it has

been offered, the ending of duty free will cost it about dollars 47

million a year. Airline ticket prices, it estimates, would have to

increase by dollars 15 a head to cover this shortfall. But for the

advertisers the picture is even bleaker.



A survey organised by the European newspaper of major spirits and

fragrance brands found them gearing up for the disappearance of up to

half of their market if duty free were abolished.



Most have been quick to join lobbying organisations such as the

International Duty Free Confederation and the European Travel Research

Foundation to press their case to Brussels before the 1999 deadline.



The ETRF is providing ammunition for this lobbying in the shape of

research showing that abolition would mean the loss of up to 100,000

jobs in EU countries, an increase in airport charges of up to 40 per

cent and, consequently, higher air fares.



‘It seems ridiculous to us that this ideology of wanting to do away with

duty free should go ahead if it is simply to cause more job losses and

lead to an increase in travel charges within the EU,’ says Charles

Garside, editor-in-chief of the European, which is campaigning against

the ban.



‘The French perfume industry, for example, is predicting horrific

effects should the trade be curtailed. At a time when a lot of people

are asking what the EU is doing for them it isn’t the greatest PR in the

world to press ahead with proposals that will lead to job losses and

increased fares. People will effectively have to pay more for air travel

just as something they see as a perk is ended.’



One of the biggest potential hazards to the success of the lobbying

process remains consumer ignorance. Despite the fact that the decision

to abolish duty free within the single market was taken as far back as

1992, the message has not yet made it to the consumer, more than half of

whom, according to a survey carried out by the European, are unaware

that any changes to duty free are planned.



For advertisers, their agencies and media buyers, the planned changes

present a rather more uncertain challenge.



‘There is an argument that the ending of duty free may actually

stimulate more demand for airport advertising,’ Guy Cheston, managing

director of the UK’s largest airport contractor, Sky Sites, says. ‘The

point is that brands will have to work far harder to promote themselves

actively, but the fact is that we don’t really know what the effects

will be.’



Around a quarter of Sky Sites’ revenue is derived from the unholy duty-

free trinity of cigarettes, drink and perfumes and it is this revenue

that would seem to be under the most pressure. The medium will, however,

retain one crucial advantage, certainly for the first two categories

well after 1999. Airside advertising will remain apart from any national

advertising restrictions, which should help to shore up demand in the

immediate aftermath of the duty-free changes. For the non-traditional

airport advertisers it is a question of seeking to target first-time

users of the medium.



‘The airport advertising concessionaires have known for some time about

the impending duty free sales ban in 1999,’ Michael Segrue,

international director at the specialist, Poster Publicity, points out.

‘They have invested considerable time in broadening the advertising

client base to lessen the effect. The cancellation of some long-term

contracts on the airside of the airport will mean that other advertisers

may have the opportunity to buy high-quality advertising at better

rates.’



Others are less sanguine about the effect of the planned changes.

Garside points out that duty free is a function of habit - once that

habit is removed, the demand may disappear too.



‘I don’t buy the argument that says advertisers can just advertise more

to help nurture demand. Duty free works because it encourages shoppers

to become the holders of goods, not the retailers. People buy things for

future consumption in duty free in a way they don’t in any other retail

environment in the world. And advertising is not going to change that.’



In the meantime, we are left with a frenzied 18 months in which to stock

up on as many cigarettes, bottles of perfume and malt whisky to last us

a lifetime.



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