Aer Rianta will have to increase its landing charges by up to 50 per cent if duty free is abolished next year, the State airports operator has said. It has also said these charges will ultimately be passed on to passengers.
Aer Rianta's commercial manager, Mr Frank O'Connell, said yesterday that the EU was "shooting itself in both feet" if it went ahead with proposals to abolish duty free on June 30th, 1999. He said it would mean 140,000 jobs would be lost, together with a $5 billion (£3.6 billion) industry.
Mr O'Connell said the European Commission wanted to abolish duty free for no reason "other than dogma". He accused the Commission of "burying its head in the sand by not commissioning studies" on the effects of abolition.
Mr O'Connell was speaking at a press conference during the seventh Europe airport trading conference, which is being held in Dublin. It is being attended by 400 representatives of 390 airports in 48 countries.
Mr O'Connell, who is the rapporteur of the Airports Council International (ACI) duty free task force, said that since 1996, support for the industry had grown and the majority of member-states "indicate that they have no problem with duty free continuing".
He said that, apart from Ireland and Greece, which have declared publicly that they want duty free to continue, all other support is covert, with none willing to take any initiative on the issue.
Mr Philippe Hamon, director general of the Airports Council International, said retention of duty free was vital because it enabled airports which could not charge much in landing and take off fees to invest in infrastructure. He warned that, if it was abolished, the effect would be to increase travel costs and slow down expansion of airports.
He said abolishing duty free would deny airports the ability to be self-financing. He dismissed previous Commission suggestions that airports could apply to the EU for funding post-duty free. He said the ACI had commissioned 22 independent studies and they all found that tax revenues would not increase in member-states if duty free was abolished. Duty free was a discretionary expenditure, he said, and it did not distort the market.
The Minister for Public Enterprise, Ms Mary O'Rourke said yesterday that she would raise the issue of retaining duty free with the British and German transport ministers later this month. She said she would also be pressing the Commission to carry out its own study into the effects of abolishing it. "As Minister with responsibility for transport, I am directly concerned about the impact on air fares in general and particularly those of low fare airlines and on their cost structures," she said. "The impact on ferry companies, which are important to many member-states, including, of course my own country is a further concern," she told delegates. She added that the customer wanted duty free and "the customer is king".
