Duty-free operators fear industry failure

At the end of 2020, the volume of the segment will be reduced by 50%, experts say. In their appeals to the state, retailers ask the authorities to subsidize half of the costs of salaries to employees and rental of premises until the resumption of international air travel.

At best, companies will be able to achieve pre-crisis performance six months after the resumption of international flights.

Retailers located in airport duty-free zones are not included in any of the programs supporting the most affected trading sectors due to the coronavirus pandemic, Fatima Dzoblaeva, Executive Director of the Eurasian Duty Free Trade Association, said. Duty-free shops in Russia have not been operating since March 16, against the background of an almost complete stoppage of passenger traffic at all checkpoints across the state border, she notes.

To preserve the industry duty-free shops from mid-March until the international traffic is fully restored, support measures should be provided, such as exemption from taxes on individuals (except VAT), a single tax on imputed income, and also on insurance premiums to state extra-budgetary funds insist on association. Operators are also asking the government for subsidies to pay 50% of the payroll until the international air travel is fully restored.

According to Ms. Dzoblaeva, about 5 thousand people work in the duty-free segment. According to sources in the duty-free industry, the average salary in the market is 65-75 thousand rubles.

Thus, support for the industry could cost the budget 187.5 million rubles.

Operators also ask for credit vacations until the end of 2020, expansion of soft loans, financial support in the amount of 50% of the cost of renting retail space, a moratorium on utility bills, etc.

The proposals were sent to Prime Minister Mikhail Mishustin and First Deputy Prime Minister Andrei Belousov, said Fatima Dzoblaeva.

Duty-free points bring up to 45% of non-aviation revenues to the airports of Moscow and St. Petersburg, in the regions - up to 30%, according to the Eurasian Association of Duty-Free Trade. According to Infoline Analytics, the total duty-free turnover in Russia in 2019 exceeded 60 billion rubles.

David Grady, president of the Eurasian Duty Free Trade Association, has been talking about reducing traffic in stores since the end of January, when the number of passengers decreased by 20% at Moscow airports due to an outbreak of coronavirus. “Traffic in the Far East began to decline even earlier. Following it, communication with Italy was suspended, which is 6% of the total passenger flow, then - by fan - the rest of the countries followed, from March 16 the flow was completely stopped, ”he says.

A representative from among duty-free operators says that he was forced to send 95% of employees on unpaid leave: there are no opportunities to take a loan from the company.

“At the same time, the state offers delays to the companies included in the list of the most affected sectors. We need subsidies or some kind of vacation, otherwise our business will be reduced by at least 70%, ”he adds.

According to Mr. Grady, the segment will be able to return to pre-crisis indicators no earlier than six months after the resumption of international traffic. According to his forecasts, without support the industry will not last even a month. Andrei Martynyuk, co-owner of the duty-free chain of Aero-trade stores, suggests that he will be able to suspend his business until the end of May.

Johannes Röll

Johannes Röll was born 1978 in Brilon,Germany. Graduated RWTH Aachen University. Over the past ten years he worked as Head of the plastic card team, where he was mainly responsible for the development of the distribution, Head of sales Department and Financial Analyst,where he got experience in planning and support sales figures for branches. For the present he works as freelancer

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