The UK Travel Retail Forum, representing Northern Ireland’s three largest airports, has called on the European Commission and the British government to return duty-free shopping for flights from Northern Ireland to the European Union.
The UK formally left the EU following a transition period in December 2020. From January 2021, the EU and the UK agreed to continue duty-free shopping in British airports to EU destinations. However, this decision did not extend to Northern Irish airports, who are unable to offer passengers the ability to buy tax-free goods.
At the time, the UK and EU were negotiating a deal on the issue of duty-free shopping, the Northern Ireland Protocol had still not been implemented. As such, Northern Ireland finds itself stuck in a legal limbo, unable to offer its passengers the same advantages as airports on the other side of the Irish Sea.
In the context of the application of the Windsor Framework, which aims to ensure the internal movement of goods from Great Britain to Northern Ireland, Belfast International and Belfast City airports, and City of Derry airports are launching an appeal to European and British authorities to return duty-free facilities to NI’s airports.
Post-Brexit woes
Northern Ireland airports are an important transport link to mainland Britain, where duty-free sales contribute £900 million to the total GDP.
The economic impact on the lack of duty-free shopping is significant for Northern Ireland. Non-aeronautical revenue, such as duty-free shopping, can account for as much as 40% of an airport's revenue. For Northern Irish airports, particularly the smaller ones, this loss of income has become critical. These duty-free incomes support reinvestment, capital expenditure, and allow the airports to develop new routes overseas.
“Businesses and airports like Belfast City are being denied the opportunity to to deliver key revenue which underpins continued investment in access and employment,” said Katy Best, Commercial Director at Belfast City Airport.
According to York Aviation, the inability of Northern Irish airports to sell duty free to passengers travelling to either Great Britain or the EU leads to a £5 million loss each year to regional Gross Value Added. Given the relatively small size of the NI economy, this amounts to a substantial loss.
Credit: Andrew McCarron/Wikimedia Commons
“Our three airports combined growth has slowed significantly while competing with zero air passenger duty (APD) across the rest of the island’s airports, many of which have thrived through supportive policies conducive to economic growth,” notes Steve Frazer, Managing Director at City of Derry Airport.
The suspension of duty free shopping has also had a knock-on effect in other sectors of the Northern Ireland economy, especially its food and drink sector. The absence of duty free facilities means that the region’s goods can no longer be sold to consumers at airports.
Level playing field
The UK Travel Retail Forum argues that enabling duty free would allow the country's alcohol producers to “show-case these products to a new international customer base” and deliver economic growth beyond airports.
“The agreement of the Windsor Framework in February of this year marks a significant improvement in the relationship between the EU and the UK,” the Forum notes. “One of the key stated aims of the agreement was to protect Northern Ireland's place within the UK. Another was to develop real economic benefits to the people of NI. Returning duty free… would deliver on both of these aims.”
Credit: Nitin Chandra/Wikimedia Common
The Forum is calling on both the European Commission and the UK government to help put Norther Irish airports on an equal footing with both EU and British airports, and to help support the Northern Irish economy. The current situation, the group argues, leaves Northern Ireland "uniquely disadvantaged."
"The return of duty free post-Brexit has proven incredibly popular with consumers, with overseas retailers seeing significant increases in sales of duty free goods to departing UK passengers," said Nigel Keal, Chairperson of the UK Travel Retail Forum. The group is leading the sector’s appeal to the Commission.
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Many in the sector feel that the Windsor Framework, intended to address tensions and trade difficulties as a result of the Northern Ireland Protocol, has left the region’s aviation sector behind.
The issue has been repeatedly brought before the British government. Last week, the House of Lords European Affairs Committee published a report, in which Northern Ireland duty-free was signalled as a point of particular contention. In its talks with the British government, the European Commission must also agree to any agreement on the return of duty free to the North.
