INTERNATIONAL. Duty free’s “˜confiscation crisis’ affecting international passengers transiting through Europe is the subject of a major article – “˜Travellers dump duty free booze as EU rules bite’ – by news agency Reuters today.
The article claims that failure to find a solution to the transit issue will continue to cost producers, retailers and consumers “millions of Euros”.
Since 6 November any traveller from outside EU, EEA and Swiss airports transiting through those locations has had duty free liquids, aerosols or gels of more than 100ml confiscated at the transit security point.
As well documented by The Moodie Report in recent weeks, despite widespread industry knowledge of the European Commission-driven rules, huge volumes of liquor continue to be sold by some international retailers to EU-transiting passengers.
“Europe’s butter mountains are now being replaced by duty free mountains,” an unnamed industry official told Reuters, comparing the problem with previous EU surpluses of butter which had to be stored and later sold at subsidised prices.
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Reuters correctly cited the example of a passenger from Singapore Changi Airport flying through Paris via Frankfurt who would have to surrender any liquid duty free goods (over 100ml) in Germany.
Michele Cercone, a spokesman for EU Transport Commissioner Jacques Barrot, told the agency: “We’re hopeful that we can have an overall method on the international level to try to tackle this problem,” noting that the EU would seek bilateral agreements with other nations if an international standard cannot be set.
COMMENT
This crisis was set to break in a major way in the consumer media sooner rather than later. Today is that day and it is certain that mainstream media across Europe will pick up on Reuters’ coverage. There are going to be some messy headlines – and many that reflect unfavourably on sectors of an industry that continue to sell goods to a travelling public that is unable to consume the end product. Unlike the butter mountain the ‘duty free mountain’ is not even stored – it is being destroyed. If it is not careful the same might be argued for the industry’s reputation.
The International Civil Aviation Organization (ICAO) meeting in Montreal later this month to discuss the issue assumes extraordinarily high importance. For as the public spotlight falls on the crisis, as the European summer season approaches and as other countries such as Australia (see below) also introduce transit limitations post 1 March, the situation could deteriorate rapidly.
The Moodie Report believes the Duty Free World Council – the supposed ultimate body of the global duty free trade that brings together all the regional and supply associations – should convene an urgent meeting to discuss global communication (intra-trade and to consumer media) as well as the lobbying effort being well spearheaded by the ETRC.
However good its political lobbying, the industry is in grave danger of losing the communication game. While today’s story is probably the result of an industry approach in order to raise the stakes on a solution, the negative consumer overtones may be the tip of an iceberg, not just a duty free mountain.
From The Moodie Report e-newsletter 22 February
A largely European problem with a European “˜solution’ has, mainly due to the transfer issue, become a chronic global headache for our business, both at a trading and lobbying level.
The ACI Europe Trading conference heard this week that huge volumes of liquids are being confiscated each week at major European hubs such as Frankfurt (20 tonnes weekly), Zurich (€22,000 by value daily) and Schiphol (7,000 litres of liquid weekly). Some is landside-to-airside items, but a worryingly high percentage is duty free liquids of over 100ml sold to passengers transiting through Europe. Peter Eriksson, Chief Commercial Officer of Zürich Airport, estimated that European airports will confiscate €450-500 million worth of goods over one year.
Noted ETRC President Frank O’Connell: “There is no comeback for consumers and there are large-scale confiscations. That in the long run is a disaster. We’re undermining consumer confidence in airport retailing. And we’re producing fine Cognac and whiskies to destroy them and pour them down the drain.”
The Moodie Report thinks there should be a consumer comeback – why not a Duty Free World Council or ACI endorsed refund system until the problem, as it surely will be, is sorted out? We know that’s complicated, but there are good enough minds and big enough budgets in this business to grapple with it. And surely it is better than creating hundreds of thousands of alienated, ripped-off consumers?
In the meantime, down the drain is exactly where most liquor bought by travellers bound for Australia from 31 March will be heading. From that date the only liquids in excess of 100ml that will be allowed in by air will be those purchased at the last port of call and only then when subjected to gate delivery – or where yet to be struck bi-lateral agreements are in place.
Australia’s response moved a frustrated O’Connell to remark: “We’re likely to have a free-for-all as nations do their own thing. There’s a danger that sales of liquids could be progressively eliminated almost by default.”
A security and trading issue has turned worryingly political. While the ETRC complains of Australia’s “disproportionate, over-complicated and trade discriminatory provisions” the Aussies might well retort that Europe’s original response to the security crisis didn’t look too fair to travelling citizens from other nations either.
Many airport executives and politicians in Asia and Africa are also less than amused by the turn of events in recent months. At a purely trading and consumer level, travel retail has to clean up its own act and prove its concern for the consumer on the one hand, and keep up its good lobbying work on the other. Both are equally critical.
MORE STORIES ON THE AVIATION SECURITY CRISIS
Australian retailers to be hurt by security changes; inbound and downtown sales impacted – 22/02/07
Important aviation security update added to ACI Airport Business & Trinity Forum in Dubai – 22/02/07
Irish MEPs call for reforms to end duty free confiscations from transit passengers – 11/02/07
