The European Commission's heavily trailed February report into the likely impact of its push to abolish duty free, ultimately conceded little ground to those attempting to save this lucrative market. The international Duty-Free Confederation (IDFC) and the Airports Council International (ACI) are both calling for a five-year transition period to work towards a workable successor regime.
The feeling among those most affected by the abolition is that Internal Market Commissioner Mario Monti has paid little more than lip service to their concerns, repeating old arguments and ploughing ahead regardless of the effects on jobs and travel.
The Commission accepts that there will be job losses, but argues that these will be time-limited, highly sectorised and localised, and that abolition will actually lead to a net creation of jobs. It comes out firmly against an extension period, saying "it would not effectively address the type of limited and specific employment problems identified."
The EC estimates short-term job losses at 53,000 based on highly variable responses from 11 of the 15 EU member states, mostly from the industry itself. The Commission urges member states to use the current EC framework of Structural Funds to minimise the effects of abolition, but given its own estimate of 70,000 Euros for the creation of one job, this would cost the taxpayer almost 4 billion euros ($4.4 billion).
The IDFC dismisses this as unworkable. "To pass this burden on to the taxpayers of Europe is not the way forward," says IDFC's chairman Frank O'Connell, "by the time structural funding becomes available, if indeed it ever does, the damage will already have been done."
By the end of February, confidence was growing among opponents of the phase-out that they had done enough to persuade the finance ministers of all 15 member states to extend the deadline of 30 June this year for five years. Or failing that, to win the argument when the heads of state meet on 24/25 March. Twelve states have already expressed support for an extension.
Source: Airline Business
