After a long stay of execution, duty free shopping within the European Union finally ended yesterday. A fierce rearguard action to retain the concession was fought by Ireland over the past number of years, on the basis of projected job losses and increased travel costs. While the campaign contributed to a change of view by the British, French and German governments, it failed to garner the necessary unanimous support from member-states. A decision taken by heads of government in 1991 was finally implemented. The EU Commission, in its role as policeman of the single market, consistently opposed retention of duty free facilities. Its objections revolved around two main propositions: that duty free sales distorted the operation of the single market and represented a subsidy to better-off travellers; and that the release of resources consequent on abolition, including extra taxes and alternative jobs, would compensate for short-term employment losses through reallocated structural funds. In principle, it was not possible to dispute the Commission's case. However, the abolition of duty free shopping was to form an integral part of the single market and because the single market remains incomplete, there was scope for a postponement. That did not happen because of the determination of the Commission and the support it received.
Some scare tactics may have been used by the proponents of duty free. Original estimates of job losses by SIPTU spoke of 9,000 people becoming unemployed, primarily at airports and ferry terminals in Dublin, Rosslare and Cork. It was suggested that ferry and air fares could increase by £15 per journey and that £70 million worth of Aer Rianta business was at risk. A later KPMG study commissioned by the Department of Finance was less negative and estimated that about 1,100 jobs directly involved in duty free sales were at risk. Experience in the US and elsewhere suggests that travellers with excess time on their hands - and money in their pockets - do not necessarily require the lure of duty free goods to spend heavily. Most airports in the United States come equipped with lavish shopping malls and travellers regard shopping as part of the journey.
Attempts by Aer Rianta to balance the anticipated fall in its revenue through increased airport landing fees and by reducing or eliminating discounts and rebates for some airlines, have quite rightly been blocked by the Minister for Public Enterprise, Mrs O'Rourke. In discussions with the Aer Rianta management, the Minister ruled out any increase in charges before the end of 1999. At the same time, she told the Dail the Government will appoint a regulator in the autumn to oversee competition at airports and to monitor the scale of landing charges and discounts operated by Aer Rianta. Her initiative could inhibit or delay aspirations towards privatisation within the company. Aer Rianta will have to absorb the cost of the abolition of duty free. It is a highly profitable company and has had years to prepare for this eventuality. The travelling public should not be asked to bear an additional burden.