The Swiss research agency reveals that the short and long term impacts on the UK’s exit from the EU will overall be very positive for the duty free industry.
With data compiled through the agency’s Business 1ntelligence Service, which includes both shopper behavior and accurate air traffic forecasting provided through IATA and ARC’s ‘Direct Data Service’ (DDS) database, m1nd-set reveals that even in the event of a “hard Brexit” the impact on the industry will remain favorable. Even though traffic between the UK and EU countries in a hard Brexit scenario is forecast to be up to 6% lower than in the event of a “soft Brexit”, by 2035 the total UK air travel market will still be over 45% higher than it was in 2015 and over 55% in the event of a soft Brexit.
The m1nd-set analysis focuses on the net gain for the duty free market as a result of Brexit by measuring passenger movements for every single flight to and from some 1500 airports.
The analysis further identifies the increased percentage of passengers who would benefit from duty free purchases. This “net gain” for the UK is clearly the greatest with over 54% more passengers qualifying for duty free purchases on UK – EU routes. Ireland also stands to see strong gains in eligible duty free purchasers at just below 40% net gain.
Interestingly 5 out of the top 10 countries that will see the most positive impact are from Central and Eastern Europe: Slovakia, Poland, Lithuania, Bulgaria and Slovenia. Malta, Cyprus and Spain, which all have high passenger movements with the UK, are also among the top ten countries that will see the biggest potential gains.
The analysis also demonstrates the net gain on an individual airport basis. Given that some UK airports have most, if not all flight movements with EU countries, the impact on the number of eligible passengers is even more significant.
UK airports such as Bournemouth, Doncaster, the East Midlands and Leeds, London Stanstead and London Southend will see gains of around 90% while Scotland’s Glasgow Prestwick Airport will see 100% of its passengers eligible for duty free purchases in a post-Brexit scenario.
Even some of the larger UK airports such as Gatwick, Manchester, Liverpool, Luton and Birmingham will also experience significant net gains of above 60%. Opportunities for increasing penetration into the duty free shops are all the more feasible in these locations.
m1nd-set Owner & CEO Peter Mohn commented on the findings: “This type of analysis is imperative to both suppliers and retailers as their pricing strategy at some airports in particular will need to be adjusted. The restitution of duty free sales on these UK – Europe routes may well present an unprecedented opportunity to all retailers to reposition the duty free shops as a place for great value shopping. It’s an extremely rare occurrence for retailers to see overnight growth of their potential customer base and all stakeholders need to think on how this opportunity can be best put to the industry’s advantage.”