Frequently Asked Questions
What is travel retail?
Travel retail is a highly popular global retailing channel, where goods are sold to international travellers or domestic passengers travelling overseas. Sales take place at international travel hubs, such as airports, ferries (onboard and at terminals), international train stations and more.
Key product categories within the travel retail sector include beauty, apparel, confectionery, spirits, wines, tobacco and luxury goods. Many internationally renowned brands and producers have a successful travel retail arm.
How does travel retail support the global aviation and travel industry?
Duty-free and travel retail are important sources of revenue for the aviation, travel and tourism industries. These sectors were among the most affected by the COVID-19 pandemic and international travel restrictions. Travel retail sales are a key component of helping these industries return to financial stability and self-sufficiency.
At present, non-aeronautical forms of revenue – such as retail and duty-free sales – account for up to 40% of total revenue at airports globally.
What is duty-free?
Duty-free sales are transactions exempt from the payment of certain local or national taxes. This is because they are sold with the understanding that the goods will be taken or consumed outside of the country, where other duties and taxes apply.
Duty-free stores therefore provide an excellent opportunity for international travellers to save money on a variety of products.
Governments can set restrictions on duty-free for a country or economical region. There are also limits on the amount of duty-free items each passenger can buy – known as allowances – which vary from country to country. Passengers may be asked to pay the duty difference when these limits are exceeded, and must declare them when entering a country.
How does duty-free benefit the UK economy?
The duty-free and travel retail industries are hugely important sectors to the UK, contributing millions to the economy and supporting tens of thousands of jobs. It provides additional revenue for the UK’s international and regional travel hubs, which can be reinvested into improving infrastructure and connectivity on a local and national level.
It is well documented that duty- and tax-free schemes can impact a passenger’s choice of destination. By attracting more international visitors, the wider UK travel and tourism ecosystem benefits.
For many sectors, such as the Scotch Whisky industry, duty-free and travel retail sales are a crucial source of income. They also provide an opportunity to showcase the best of the UK’s premium brands.
Where can I buy duty-free?
Sales of duty-free goods take place in highly regulated retail environments which are governed by customs allowances. The majority of duty-free sales take place in airports, but also at ports, ferries, cruise ships, international railway stations, land border shops and onboard aircrafts.
Does duty-free have a public health impact?
Because duty-free products are sold for export out of the United Kingdom, duty-free does not impede on the UK’s public health objectives.
The nature of duty-free markets is fundamentally different to domestic retail markets, as it is characterised by low frequency users. Often, consumers are seeking to make purchases linked to travel (e.g. purchasing a Scottish whisky when visiting Scotland). It is also a market with a high level of gift purchases.
Are duty-free and tax-free the same thing?
No. Duty-free refers to the sale of goods usually subject to excise duties. These products are exempt from customs duties only when they are to be exported (e.g. consumed overseas), but may be subject to other taxes in their destination country. This discount is automatically applied to the product at the point of sale at a duty-free store. In the UK, duty-free only applies on departure, as the Government has not legislated for duty-free on arrival unlike many other countries.
Tax-free refers to items that are eligible for refund on VAT (currently 20% in the UK) if they are exported overseas after purchase. It tends to refer to luxury items, such as clothing, jewellery, watches and other accessories. As of January 2021, the UK does not offer a tax-free shopping scheme for international visitors (unlike the rest of Europe).