The impact on jobs of the phasing out of the sale of duty-free goods by June, 1999, decided by the EU in 1992, is prompting widespread concern in the travel industry and amongst MEPs. Earlier in the year, a private study on behalf of the maritime industry predicted a substantial loss of jobs on cross-channel ferries and related services, and now several studies produced on behalf of the air transport industry are adding to these worries with estimates that another 30,000 jobs will go.
It is predicted that the average price of a European package holiday will rise by ECU 14 per passenger, with the increases higher in Scandinavian and other northern European countries, such as Britain and Ireland, where holiday costs are related to the duty-free market.
Another study forecasts that cheap carriers, such as Virgin Express and Ryanair, relying on duty-free sales to keep costs down, will be particularly badly hit; it is forecast that Ryanair's charges could rise by as much as 20 per cent, leading to fewer passengers.
The total value of duty-free sales in Europe is estimated at ECU 5.4 billion. There are now fears that regional airports which have mushroomed over the last few years will be particularly at risk. Indeed, initial estimates forecast that 50 per cent of such airports would be loss-making if duty-free revenue disappeared, and Birmingham airport has already announced that it will place expansion plans on hold. MEPs continue to press for an independent study of the effects of the abolition. MEPs such as Karl von Wogau (EPP; D) maintain that the European Commission must undertake to carry out a study in 1999, but the Commission is firmly resisting such demands and maintains that the 1999 deadline must be respected.
Brian Crowley (Munster, UFE) is seeking to offset the negative effects of the move. He commented: "The abolition of intra-EU duty free, would not only impact on travel costs, but would also severely impact on the ability of small and medium-sized enterprises to launch products on a world-wide market. The knock-on affect of this on employment, on economic growth and on the increasing peripherality of our already peripheral regions is something which the Commission and the Council do not seem to have taken into account. It is now time that they re-study these matters and carry out a full impact assessment of this decision."
In the run-up to the abolition of duty free, loopholes have been discovered in the present system and attempts have been made to tighten up controls. The onus is now on the vendor to ensure that customers do not exceed their duty-free allocation. However, a Commission report states that, although improvements have been made in this field, controls are still not adequate. Areas of particular weakness include air travel where passengers can buy duty-free items at different sales points within the airport and also on board the aircraft. However, no major legislative action will be taken in view of the short period of time before duty-free sales are abolished. Nevertheless, the Commission does insist that there should be a tightening of existing controls.