All Dixons Travel branches in UK airports are to close. The announcement was made this morning by parent company Dixons Carphone.
The closure was blamed on the ban on tax free airport shopping, which took effect on 1st January 2021. Following the end of the Brexit transition process, the Government had to choose between allowing tax free shopping when travelling to EU countries or banning it entirely. It chose the latter.
(The Government has also banned VAT reclaim for tourists leaving the UK, much to the chagrin of London’s luxury retailers. They face losing substantial sales to foreign tourists who may now find goods cheaper elsewhere. That said, you may or may not agree that letting foreign tourists reclaim £833 of VAT on a £5,000 handbag was a great idea in the first place.)
There are currently 35 Dixons Travel shops. As well as the UK airport stores, it is present in Ireland, Norway and on two P&O cruise ships. All will close.
The chain had historically made “over £20 million per year” in profit. It shows the remarkable profitability of airport shopping despite the high rents charged by UK airports.
It remains to be seen how many other retailers now pull out of UK airports. Whilst tax free pricing did encourage sales, many travellers – especially at Heathrow – shopped purely for convenience. These sales should be secure irrespective of whether VAT is charged. Most stores operate on turnover-based rents which gives them protection against lower sales.
The Airport Operators Association said in a statement:
“Amid the devastating impacts of the Covid-19 pandemic, the UK Government’s decision to remove airside VAT-free shopping as of January 1, 2021 is making a bad situation worse. The Government should urgently review this decision and reverse course before further damage is done.
The UK is now the only country in Europe without airside tax-free shopping. Our European competitors get a Brexit benefit by being able to offer UK-bound travellers every opportunity for tax-free shopping while UK airports are left at a significant disadvantage.
The closure of Dixon Travel stores and the loss of jobs shows the first real-world consequences of the Government’s inexplicable decision. These are unlikely to be the last.
As a tentative restart of aviation draws closer, Government should be supporting revenue recovery for airports after the huge losses suffered by airports during the pandemic. Instead, the Government has left airports with one hand tied behind their back in the efforts to return to profitability.”
The full press release from Dixons Carphone is here (PDF).