It is surprising how things are so interconnected. Who would have thought that the Icelandic ash cloud would affect the duty free market! But that is what has happened and the effect is not good. A Bloomberg article shows that the shutdown of travel across the European airspace due to the odd natural phenomenon is burning the pockets of duty-free retailers. The loss is an estimated 25 million euros ($34 million) a day!
The industry has shown a declining trend over the years owing to a decrease in travel for both business and leisure. In an estimate by Generation Research, the sale of duty-free items sold at airport shops and on planes has diminished by 8 percent, taking the figure to $22.7 billion last year. European sales accounted for half of the sales.
Dearth of passengers owing to delayed flights translates into lost revenue for the shops at the airport. Also the passengers who are stranded on the airport aren’t really in a mood for shopping due to obvious reasons and hence, aren’t contributing to sales. Asian travelers who invariably spend substantially on European goods have not been able to fly in.
Airspace is reopening across Europe as the air is clearing, but a new ash cloud headed for the U.K. might delay the reopening of the British airports. The ash could clog plane engines, so consequently most of Europe has had to face a prolonged shutdown.
Via: BusinessWeek
