Print Friendly

What is duty free & travel retail?

 

Duty free & travel retail is a global industry selling goods to international travellers. Sales in duty free shops are exempt from the payment of certain local or national taxes and excise duties, normally with the requirement that the goods are only sold to travellers who will take them out of the country.

Products that can be sold duty free vary by jurisdiction and different rules apply based on excise duty calculations, import allowance restrictions and other factors. Airports represent the majority of such sales globally but duty free & travel retail is also available at border shops (under certain conditions, usually requiring the purchaser to spend a minimum amount of time outside the country), onboard cruise & ferry vessels in international waters, onboard aircraft during international flights, at some international railway stations and in some countries in downtown stores where proof of travel is required in order to purchase.

Some jurisdictions (for example in non-EU Europe, Australasia, the Middle East and Latin America) offer travellers the opportunity to buy duty free goods on their arrival at their destination airport within the territory concerned. In such places, arrivals duty free has become an important source of revenue for airports. In some territories, the term “travel retail” was coined to define the sale of products in a travel environment on which taxes and duties remain payable even though the customer may be travelling internationally. This is notably the case within the European Union, where the sale of duty free goods to customers travelling within the EU was abolished in 1999. “Travel retail” is a term that commonly refers to sales made in travel environments where customers require proof of travel to access the commercial area, but which are subject to taxes and duties. Duty free & travel retail generates vital revenues for the aviation, travel, tourism and maritime industries.

Airports in particular increasingly rely on commercial revenues to fund the development of their infrastructure, and to help them keep the landing fees payable by airlines as low as possible. At airports across the world, retail is now the largest contributor to non-aeronautical income. Shopping is a key element of the travel experience for many passengers, and as such, the provision of duty free and travel retail goods is a service as well as an important generator of revenue.