THE trend towards cheaper air fares in Europe could be threatened by a vote in the European Parliament to abolish duty free sales even earlier than the 1999 timetable set by the Commission, Aer Rianta said yesterday.
A committee of the parliament is to vote next week on a proposal to abolish duty free sales within the EU as being a distortion of duties. Mr Frank O'Connell, group commercial manager of Aer Rianta, claims that if the proposal is carried, European airports will have to raise landing charges to airlines, with a knock on effect on air fares.
Mr O'Connell is hosting a meeting in Straffan, Co Kildare, this morning of the chief executives of 22 European airports to organise "a co-ordinated and cohesive group" to lobby against the measure. Duty free sales are especially important in the economics of the smaller European counties, Mr O'Connell said. "Over 85 per cent of our duty free business in Dublin is intra EU and that would disappear." Dublin had duty free sales in 1995 of £52 million.
The duty free element is even more vital to regional airports in Europe, according to Mr O'Connell. Catering and duty free at Shannon Airport had a turnover of £105 million last year in Cork, retailing brought in £5.1 million.
Intra EU duty free business is not as proportionately important for the major European airports, though Mr O'Connell said that the chief executives of the airports in London, Paris and Amsterdam will be attending today's meeting.
Aer Rianta has been lobbying the Irish MEPs to block next week's proposal. Mr Gerry Collins, leader of the Fianna Fail group, has come out in support. Another Munster MEP, Mr Pat Cox, sits on the committee which will vote next week on the amendment by a Dutch Socialist MEP to end intra EU duty free sales. Mr Cox will argue that the amendment should not be taken at all, sources close to him said.
The duty free issue has serious implications for airlines, too. "I understand duty free is central to the economics of Ryanair", Mr O'Connell said. A spokeswoman for Ryanair said it made 80p on each passenger carried and "a fair proportion" of that comes from duty free. Aer Lingus, which has not pushed on board duty free in the past, is now seeing it as a source of extra revenue.
For the low fare regime to work in Europe duty free must be retained, Mr O'Connell claims. The alternative is that airlines will have to compensate on the double for its loss, losing an import ant source of revenue and facing higher landing charges.