Our Industry’s History
1930s – Motta International opens in Front Street, Colon
Motta sells duty free liquor and fragrances to cruise ships moving through the Panama Canal.
1944 – Chicago Convention signed, enabling international commercial travel by air
In December 1944, 52 states signed the Convention on International Civil Aviation (commonly known as the Chicago Convention). The convention established the foundations for peaceful global air travel, with the intention to “create and preserve friendship and understanding among the nations and peoples of the world.”
The agreement was officially ratified in April 1947, marking the formation of the International Civil Aviation Organization (ICAO), the United Nations’ specialised agency for air transport.
1947 – Ireland passes the Customs-Free Airport Act
Soon after, the Irish Assembly passed the Customs-Free Airport Act, which paved the way for Shannon International Airport in County Clare, Ireland to become the world’s first duty free airport. The proposed model was the brainchild of Irish businessman and hotelier Dr Brendan O’Regan.
O’Regan recognised that many countries needed innovative new sources of revenue in the aftermath of World War II. As an airport catering comptroller, he also noticed that the newfound freedoms of passengers had encouraged a desire to shop.
By evidencing that cruise ships sold alcohol without charging taxes, O’Regan convinced the Irish Government to declare the then-struggling Shannon Airport outside of Ireland, meaning sales made there would not be subject to national taxation and duties.
1951 – First duty free store opens at Shannon Airport
In 1951, O’Regan opened the world’s first duty free store at Shannon Airport. Initially, the store sold local produce, with everything from meat, eggs and butter to whiskeys and other spirits on offer. Though duty free farm products did not catch on, alcohol sales proved to be an instant success with passengers.
The popularity of the Shannon Airport duty free store led to the model being replicated across the world. In 1957, Amsterdam opened its first duty free store, and in 1954, O’Regan presented a proposal for duty free stores to the New York Convention on International Travel, signalling the beginning of the ‘era of duty free’ in the US.
1954 – The New York Convention of International Civil Aviation Organisation recommends a framework for duty free allowance be developed for travelers
1956 - 60– Duty free takes off
London Heathrow sells its first duty free goods, stores open at Schiphol and Kastrup, Miami and Frankfurt.
In 1960 the first seeds of the DFS Group are sown.
1970 – Gebr Heinemann opens its first fragrance store in Cologne
1973 – Formalisation of allowances
In Kyoto, the World Customs Organisation formalises a standard international practice for passenger allowances on perfumes, spirits and tobacco.
1980 – Lotte Duty Free opens its first downtown duty free store in Seoul
1983 – Dubai Duty Free is founded
1988 – Aer Rianta International is established
1991 – European Union announces plans to phase out duty free sales
In November 1991, the Council of European Finance Ministers agreed that by 1999, duty free and tax free sales within the European Union would be phased out.
1999 – Duty free sales abolished within the European Union
Regardless of several legal challenges, the EU commission went ahead with the ban, and duty free sales within the EU were abolished in July 1999.
However, duty free stores could continue selling items duty free to travellers whose final destination was outside the EU. Many airside retailers decided to impose single pricing on most products, making savings equal for all travellers, regardless of destination.
2011 – Louis Vuitton joins travel retail
Opening it's first airport store at Incheon International Airport
2014 – Dufry consolidates a number of market players under one banner
2017 – The duty free and travel retail industry celebrates its 70th anniversary
2020 – Covid-19 pandemic brings international travel to a halt
Prior to the outbreak of Coronavirus in 2020, the duty free market experienced impressive and uninterrupted growth. According to the Duty Free World Council, the industry had been growing at a compound annual growth rate of more than 8% every year since 2000. This made it one of the fastest growing global sales channels, second only to e-commerce.
Covid-19 related travel restrictions had a devastating impact on duty free sales across the world, as 1.72 billion passengers were lost in 2020. The reduction in traffic also highlighted how essential duty free and travel retail sales are to the health of travel hubs, with many European airports relying on non-aeronautical sources of revenue – namely retail sales – for as much as 50% of their total income.
2021 – UK leaves the European Union, marking a return of duty free shopping
In January 2021, the UK Government reintroduced duty free shopping for passengers travelling to the EU, following its departure from the bloc at the end of 2020. The duty free allowances of British passengers returning from non-EU countries were also significantly increased, providing one of the most generous allowances in the world.
What next for duty free?
The disruption to international travel has forced many duty free and travel retail operators to diversify their offerings, and many have since promoted e-commerce channels and click and collect systems to improve the customer experience and speed recovery. In addition, many countries have also now mandated for duty free stores on arrival as well as departure. This includes the majority of travel hubs in Asia, the Middle East, Australasia, and several non-EU countries in the European Economic Area and Eastern Europe. Despite the uncertainty of the last two years, the recovery of the duty free and travel retail industry is so far exceeding expectations. In many markets, sales volumes are recovering faster than increases in passenger numbers, and spend per passenger has increased significantly when compared with 2019 levels. As travel hubs recover from the revenues lost from such a dramatic and sustained decrease in traffic, it is inevitable that they will have to rely further on commercial income for economic survival.