Duty Free Industry to see a lot of churn
Ambrosia|January 2021
There are various challenges facing the travel retail industry in 2020. Some insight into the issues from the travel retail perspective and its impact on the Duty Free Industry

The Duty-Free Retailing market revenue was 70,512 Million USD in 2019, and will reach 1,12,518 Million USD in 2025, with a CAGR of 8.1% during 2020-2025.

Market reports world has been monitoring the duty-free retailing market, and it is poised to grow by USD 53.5 billion during 2020-2024, progressing at a CAGR of 9% during the forecast period.

The duty-free retailing market size has the potential to grow by USD 53.5 billion during 2020-2024, and the market’s growth momentum will accelerate during the forecast period.

But Covid could have an impact on duty-free sales in 2020.

Private airport operators are demanding doubling of duty-free liquor and baggage allowance in the Union Budget.

The memo highlighted that liquor allowance given in India was not on a par with that of neighbouring countries

Ahead of the 2021 Budget session, a group of private airport operators has called for an increase in the limit of the duty-free liquor and baggage allowed for the passengers to carry at domestic airports.

The Association of Private Airport Operators (APAO) has released a memorandum underlining its wish-list for the upcoming budget to grow revenue from airport operations. The association comprises members belonging to PublicPrivate Partnership (PPP) airports at Delhi, Mumbai, Bengaluru, Hyderabad and Cochin that are already operational as well as the upcoming airports in Navi Mumbai and Mopa in Goa.

The association has demanded that the liquor allowance from duty-free shops in India be increased to four litres per passenger from the existing maximum limit of two litres. The memo highlighted that the liquor allowance given in the country was not on a par with that of neighbouring countries and the Asia Pacific countries.

“Sizable business at duty-free operation in Southeast Asia / Middle East region is through tourists that originate from India. Indian passengers purchase duty-free goods outside India depriving opportunity to India’s duty-free business,” read the APAO memo.

APAO has also sought to double the baggage allowance for duty-free shopping at the domestic airports, to enhance forex earnings. This demand comes with a rider though that the extra baggage should be purchased only from duty-free shops in India.

The airports are also seeking a rationalisation in the prices of aviation turbine fuel (ATF). This will benefit the airlines directly as it constitutes about 50% of their overall operating costs. This will in turn benefit the airports, considering they are the most important partners of the airlines as their business depends on the footfall generated by the latter.

“Sooner ATF is subsumed into GST, better it is for the industry as it reduces the overall air travel cost... ultimately making air travel more affordable,” the memo said.

Another demand voiced by the airport operators is that of reduction of GST on aeronautical services and user fees from18% to 12%, which would make air travel more affordable and hence increase passenger footfall.

More than 235,000 retail jobs have been lost in 2020, and 20,000 shops permanently closed.

2020 Challenges to Travel Retail

Brexit & the Excise Duty Directive

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