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Brexit: Future Challenges in Financing Airports

Posted by on 06 November 2017
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The turbulent changes brought by Brexit lead to uncertainty for the future of retail revenue in the aviation industry. François Bourienne, Vice President at ETRC and Commercial Director of the AGS Airports, discusses the potential economic impact of Brexit with a focus on duty and tax free sales in European airports. François will be speaking at GAD World on the 8th of November - click here to find out more.

The United Kingdom’s decision to withdraw from the European Union has the potential to significantly disrupt the European aviation sector and will be a source of uncertainty for airlines and airports over the next year and a half.

ETRC recognises the challenges that European aviation and airports face in terms of air traffic access and supports Airport Council International’s (ACI) calls for an early resolution on these important issues and the prioritisation of a solution for aviation between the UK and the EU during negotiations.

GAD World Speaker

Amidst the uncertainty facing European airports, improving the outlook for airport financing will play an important role. Non-aeronautical revenue is a key driver of airport infrastructure development and the Duty Free and Travel Retail industry plays an important part in the future financing of airports across the world.

With the UK leaving the EU, there is a significant commercial opportunity for European and UK airports, as well as for airlines, in the form of a return to duty and tax free sales for travellers between the UK and the EU. The benefits of a return to duty free sales are obvious. There are currently more than 153 million air passengers per annum between the UK and the EU. Any airport connecting the EU27 and the UK could therefore be expected to benefit from the return of duty free.

However, the reintroduction of duty free sales is not a guaranteed outcome post-Brexit.

There are a number of scenarios that can frustrate or delay a return of duty free sales. Whilst there is no need to change EU law for the potential return of duty and tax free sales to passengers between the EU27 and the UK, the return could be delayed or diminished through a transitional agreement between the EU and the UK that does not take into account the significant commercial opportunities it represents. The UK itself will need to change several laws in order to ensure a reciprocal return of duty free sales.

The return of duty free sales for UK passengers should not be contingent on the future relationship between the UK and the EU Single Market or the Customs Union.

Both the UK and the EU need to agree that the immediate return of duty & tax free sales for UK travellers is a positive benefit to all and therefore should be grasped from the day the UK leaves the EU. The return of duty free sales for UK passengers should not be contingent on the future relationship between the UK and the EU Single Market or the Customs Union. The future relationship of the UK as a third country to the EU should be immaterial to the question of whether duty and tax free sales are allowed between the UK and the EU27.

We are therefore working closely with our partner industry sectors to generate support in EU Member States and the UK to ensure a return to duty and tax free sales is not hampered or put off and is allowed to apply from the day of Brexit, 29 March 2019, for all air passengers between the UK and the EU.

The Duty Free and Travel Retail industry is counting on support from airports across the EU to recognise the commercial opportunities inherent in a return of duty and tax free sales. We need your support to remind national governments of the significance of duty free shopping and the opportunities the return could represent.

If we do not make our case now, we could lose a significant commercial opportunity.

Airport finance news GAD

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