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New rules benefit airport retailers

Restraints on liquids, gels to be a boon

By František Bouc
Staff Writer, The Prague Post
November 15th, 2006 issue

Retailers at Prague Ruzyně Airport breathed a sign of relief with the announcement of new airline security measures announced by the European Commission (EC) Nov. 6.

Fears that the new EC regulations could decimate the duty-free industry led the European Travel Retail Council (ETRC) to battle the EC for rules that would make travel safer while not crushing their business. What they got will actually increase their profits.

"Right from the start, the ETRC's senior management saw that the move to secure liquids posed a massive challenge to the European travel retail industry," ETRC spokesman Conor J. Foley said. "We have a solution now in Europe that balances these needs."

Seal of Approval
  • Passengers who want to carry on liquids, pastes, gels, creams and aerosols exceeding 100 milliliters (3 ounces) will have to buy them in duty-free shops
  • Such purchases will be sealed in plastic bags, which may not be opened until arrival. If they have been opened prior to transfer or return, they will not be allowed through security
  • Sealed bags will only be accepted as secure on the day of purchase
Source: European Travel Retail Council

An alleged terrorist plot to use liquid bombs to blow up planes at London's Heathrow Airport in August led to a temporary ban on liquids and gels aboard planes in the Czech Republic and several other European countries. Duty-free shops lost $26 billion (568 billion Kč) during that time — half their normal revenue.

Since Nov. 6, passengers buying liquids, gels and pastes have had to seal their purchases in transparent plastic bags. The new measures will not restrict airport shopping after passengers are through passport control and will standardize rules at airports within the European Union, Switzerland, Norway and Iceland.

Airport retailers throughout Europe anxiously awaited the new EC regulations, fearing that they could bring about a major decline in profits.

"We are afraid that the regulations would will our sales," Kryštof Kmoch, head of Unimex's duty-free shops at Ruzyně, said days before the EC ruling.

Now, representatives of shops said they expect the regulations to boost their beverage sales.

"We do expect an increase in sales of bottled water," said Daniela Hupáková, spokeswoman for Czech Airlines (ČSA), which operates duty-free shops at Ruzyně. She insisted that ČSA does not intend to take advantage of the situation by increasing prices.

Foley said that the rules would not coerce unsuspecting passengers into becoming unwilling customers.

"I think it is wrong to suggest that passengers will now be forced to shop at airport retail outlets," he said.

Lucrative business

Even before the new regulations, stores at Ruzyně were attractive business opportunities for retailers.

In early October, airport management selected new retailers to rent commercial spaces within the airport, doing away with controversial rental contracts in which some store operators paid nothing for space within the airport.

Five companies emerged victorious from the tender in which 23 companies took part. Rental prices at the airport are now on par with rents paid by retailers in downtown Prague.

The airport itself stands to benefit from the increased business of its stores. Apart from rent, retailers at the airport must give 5 percent to 7 percent of their revenue to airport management.

Last year, airport management held some 300 renting contracts for commercial spaces worth nearly 1.4 billion Kč — making up more than 30 percent of the airport's annual revenue.

František Bouc can be reached at fbouc@praguepost.com


Other articles in Business (15/11/2006):

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