New Airport Ban May Hurt Some Airport Retailers

The ban on liquids and gels from carryon luggage after a foiled terrorist plot may pinch airport retailers that mostly sell drinks and beauty aids, experts said on Thursday.

Worldwide sales of duty free shops totaled $27 billion in 2005, according to industry-tracker Group Generation, with alcohol, cosmetics and perfume representing 50.5 percent of total sales. A prolonged ban could take a significant chunk out of sales, and threaten those shops specializing in wine and spirits or cosmetics.

"The uncertainty of it and the uneven enforcement of the ban could cause a 30 to 40 percent decline in sales at some stores," said C. Britt Beemer, chairman of America's Research Group, based in Charleston, S.C.

It could be more for Duty Free shops because alcohol and perfume are the two largest selling products in many stores.

"I'm not sure if you can completely mitigate the loss of the sales. This could become a serious problem over the long-term," said Michael Payne, executive director at the International Association of Airport Duty Free Stores.

On Thursday, United States banned all liquids and gels from carryon luggage following the discovery of terrorist plot in Britain. The plot hinged on terrorists smuggling onboard explosive liquids and detonators hidden in soda cans.

Britain extended its ban to include all carryon luggage.

"Right now, we're waiting for more clarification as the TSA evolves its requirements," Payne said. "But we'll do whatever needs to be done to make sure it's safe to fly."

Other retailers may find the ban boosts their bottom lines, according to Scott Krugman at the National Retail Federation.

"Restaurants will end up benefiting from this because people will eat and drink before getting on their flights," Krugman said. However, Krugman expects only a short-term impact on retailers.

"Once we know which regulations are permanent and which ones are temporary, we'll see these stores adapt what they're selling and how they're selling," he said.

The ban follows several years of flourishing retail sales at the nation's airports. Increased security checks since Sept. 11, 2001 boosted business at airport stores as travelers were forced to get to the airport earlier and shopped during their extra time.

Airlines' recent moves to eliminate or reduce drink and food services to cut costs also helped sales of water and food items at airports. Travelers resorted to buying bottles of water and other beverages before boarding the plane.


AP Business Writer Anne D'Innocenzio in New York contributed to this report.

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