Duty free cut threatens EU ferries

Date: 05/06/1997

By Chris Johnstone

EUROPE's ferry industry will haemorrhage jobs, be forced to cut routes and, in some cases, double ticket prices if duty-free sales disappear, claims a new report on the consequences of abolition.

The study warns that around 50,000 jobs would go in ferry and related tourism industries, with capacity halved in Finland and severe cuts in services around the rest of Europe. It also forecasts that ticket prices would rise by at least 10&percent;, with much bigger increases of up to 150&percent; in Finland and 200&percent; in Sweden.

The report has been drawn up by the European Travel Research Foundation, formed by 'interested' companies anxious to investigate the consequences of the planned abolition of duty-free sales at the end of June 1999 for passengers travelling between EU member states.

It comes in the wake of a similar study carried out by airports which warned that air fares would have to be increased and many regional services cut.

Campaigners fighting to save duty-free sales hope the waves created by the study in those Commission directorates-general which might have to deal with the consequences of abolition - from job losses to regional isolation and environmental problems - should provoke questions about the wisdom of keeping to the timetable.

It is looking in particular to Finnish and Swedish transport ministers to raise concerns about the potential knock-on effects on infrastructure at a meeting with their EU counterparts on 18 and 19 June.

The duty free lobby wants national ministers and the Commission to acknowledge that more homework is needed on the consequences of ending the system. It points out that a study promised by the Commission when ministers signed the death notice for duty free in 1991 has never been carried out and argues that the world has changed since then, with the Commission itself having failed to push forward the tax harmonisation which made duty free such an anomaly and a greater sensitivity now to job losses.

The report on the ferry industry pinpoints Finland as the biggest loser if abolition goes ahead. Duty-free sales account for 65&percent; of Finnish ferry company revenues, a higher proportion than in all the other countries studied.

It also maintains that duty-free revenue is crucial to continued operations on many German routes, claiming 90&percent; of excursion trips could be axed when duty free goes, with ticket prices rising by 30&percent;.

The report suggests that ferry services across the Dover Straits between the UK and continent would be almost halved and fares on remaining routes would rise by at least 10&percent;, with similar increases in Ireland - the only country with no land link to the rest of the EU. It claims that the abolition of duty free would probably result in the closure of all Ireland's direct ferry services to continental Europe, meaning longer road journeys through Ireland, the UK and France.