The Duty-Free Market Is Growing, Discounts Not So Much

The global duty-free market is expected to reach £47.7 billion by 2019 according to some reports.

As a child I remember my father bringing back bags of duty-free from business trips to America — a tradition I have failed to uphold. In fact I can’t remember the last thing I bought at a duty-free shop, only the hours spent wandering around seemingly indifferent shops the world over.

With the growth of ecommerce, surely duty-free shops have lost their competitive advantage of price. But with the market growing, perhaps not.

Are savings still to be had at duty-free shops in Europe?

Methodology

I first identified two sources for duty-free purchases — airport duty-free shops and inflight duty-free shops.

Many airlines publish inflight magazines with price lists for products available onboard. I found 5 budget airlines that operate from European airports that publish such magazines: Ryanair, WizzAir, Easyjet, Thomas Cook, Flybe and 2 premium carriers: British Airways and Qatar. The infight magazines used were dated within the first quarter of 2016 (Jan – Mar).

I drew up an itemised list of all perfumes (113 in total) and prices (Male and Female) from these magazines. Perfumes were chosen as a product for comparison because they are a standard offering to compare across all retail channels.

My initial assumption was that, each class of carrier (budget and premium) would each carry an almost identical inventory of perfumes. In fact, all airlines carry an almost unique range of perfumes available for purchase onboard.

Out of the 113 perfumes I analysed sold by these airlines, only 1 was sold by both premium and budget airlines — Marc Jacobs Daisy Dream 50ml (Female). 21 perfumes were sold across multiple airlines in the same class. 92 were available on only one airline.

Full list.

The largest duty-free shop operator in UK airports is World Duty Free. Their website publishes prices available in aiports. I used prices availbale in London Heathrow Terminal 2 for perfumes found in the in-flight magazines — but prices seem fairly static UK wide, it is only range of products that differs.

In addition, I also collected prices of these perfumes from Amazon UK for comparison. Prices from Amazon include delivery fees, if applicable (I did not consider Amazon Prime as a delivery option). I used Amazon for its range of products and its ecommerce market share in the UK.

Analysis

Amazon – airline prices

Histogram of Amazon less ave airline price all classes GBP Mar 2016

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Onboard 46 perfumes are cheaper at an airlines duty-free store (average price on all classes) than Amazon (67 that are more expensive).

Overall perfume prices are on average £3.54 GBP cheaper on Amazon compared to buying onboard at an airlines duty-free store.

68 of the 111 perfumes have very little price difference (between -£10 GBP and £10 GBP). At each end of the distribution 2 perfumes are over £35 GBP cheaper on Amazon, 2 are £20 GBP more cheaper on airlines..

Splitting out by carrier type, budget carriers have more perfumes that are cheaper onboard (34) than expensive (22). Conversely, of the 58 perfumes carried on premium carriers, 12 are cheaper onboard compared to 46 that are more expensive.

Amazon - airline prices GBP Mar 2016

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The best airline for discounted perfume is Ryanair with average savings of about £5.36 GBP. Compare that with the worst, Qatar, where you are likely to pay £11.97 GBP more for perfume onboard. All premium carriers considered, British Airways and Qatar, are both more expensive than Amazon, on average.

Amazon – World Duty Free prices

Histogram of Amazon - World Duty Free Price GBP Mar 2016

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Again, Amazon comes out slightly better for price when compared to World Duty Free shops. 22 perfumes are cheaper to purchase at World Duty Free shops versus 39 that are more expensive.

Amazon – average all duty-free retailers prices

Histogram of Amazon - All Duty Free Price GBP Mar 2016

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When considering the average price of perfumes across all duty-free outlets (airlines and shops) 47 are cheaper on duty-free, 66 are cheaper on Amazon.

Clearly if your flying on one airline you won’t have the luxury of being able to compare prices, but duty-free does still offer a number discounts — something I was not expecting. Savings are still relativly small though, with the average

Duty-free rank Perfume Size (ml) Gender AMZ – Ave. Duty-free Price GBP Mar16
1 Gucci Oud Intense 90 Male £22.10
2 Ajmal Aurum 75 Female £20.00
3 Jimmy Choo Illicit 60 Female £19.40
4 Acqua di Parma Colonia Oud 100 Male £19.37
5 Mont Blanc Lady Emblem 50 Female £18.75
6 Lacoste Love Of Pink 90 Female £17.52
7 Viktor & Rolf Spicebomb Extreme 50 Male £16.94
8 Gucci Guilty Studs 50 Female £15.50
9 Dolce & Gabanna L’imperatrice No. 3 100 Female £10.36
10 Taylor Swift Wonderstruck Enchanted 50 Female £9.62

Full list.

The 3 best perfumes to buy at duty-free retailers are: 1) Gucci Oud Intense 90ml – Male (savings of: £22.10 GBP), 2) Ajmal Aurum 75ml – Female (£20.00 GBP), 3) Jimmy Choo Illicit 60ml – Female (£19.40 GBP).

World Duty Free prices – Airlines

Histogram of World Duty Free - Ave Airline Price GBP Mar 2016

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There is also a normal distribution of price differences between the two duty-free channels, airlines and airport shops. In summary, 24 perfumes are cheaper at World Duty Free stores when compared to the average price you’d pay onboard a plane. 2 perfumes have no price difference, whereas 35 are more expensive at World Duty Free stores.

Improvements

Overall this is a fairly trivial analysis. One of the biggest issues with this analysis is Amazon’s product pricing which can change many times per day. Given this is our single source for non-duty free pricing, daily variations may be skewed. The addition of more retailers would add more stability to price calculations.

tl;dr

  • Perfume prices are typically more expensive at duty-free retailers when compared to buying on Amazon.
  • Most savings are less than £10 GBP between duty-free retailers and Amazon.
  • The 3 best perfumes to buy at duty-free retailers are: 1) Gucci Oud Intense 90ml – Male (savings of: £22.10 GBP), 2) Ajmal Aurum 75ml – Female (£20.00 GBP), 3) Jimmy Choo Illicit 60ml – Female (£19.40 GBP).

Acknowledgements

  • All the retailers used in this post for publishing thier products for sale online.
  • And finally… XE.com for exchange rates.

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Airports That Are Unreasonably Far From City Centres

On a journey home from the airport last year I shared a cab with a fellow passenger heading in the same direction. In the awkward small talk between two strangers he asked if I had heard of London Oxford Airport (OXF). “Oxford, in the UK?”, I asked in clarification. “Yes”, he chuckled.

For those not familiar with UK geography, Oxford is over 100km outside of London. A bold, if a little questionable, effort by the airports marketing team.

It would appear Oxford is not alone. See: Paris Vatry (XCR) – 161km to Paris, Oslo Torp (TRF) – 119km to Oslo, or Munich West (FMM) – 115km to Munich, as examples. Arguably none of these are considered their cities “main” airport, however.

Such extreme journeys got me thinking; where are the shortest and longest transfer distances from airports to the cities they serve?

Methodology

To obtain a list of cities for analysis I used Euromonitors’ “Top 100 City Destinations Ranking“. I chose such a list because passengers will expect good infrastructure from heavily travelled destinations and many will be places readers have, or are intending to, visit.

Using EuroMonitors list of cities I then found the closest major airport using a Google search. If there are multiple main airports in a city, airports with the highest yearly passenger volume were selected.

I then used the reported co-ordinates of the geographical centre of each city using a WorldMaps dataset. Similarly, I used the geographical centre of a cities corresponding airport from the OpenFlights dataset to calculate the shortest route by distance on Google Maps using a car from airport to city.

Regional Distribution of Euromonitor Top 100 Cities 2014

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It is important to note we are only considering the Top 100 tourist destinations as reported by Euromonitor. This does add some bias to the analysis with 70% of the cities considered located in Europe and Asia Pacific.

Analysis

All airports by distance to their cities

km to City Centre by Road Euromonitor Top 100 2014

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km to City Centre by Road Euromonitor 100

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km to City Centre by Road Euromonitor Top 100 2014 histogram

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Did you know? The large majority of Top 100 cities are served by airports within 50km by road to their closest main airport.

Based on the shortest road journey by distance (not time) you will need to travel a median distance of 20km from a main airport to its city (50 of the 100 cities are within 20km of their main airports).

Not all cities on this top 100 list had their own airport. The two cities with the longest connection between airport and city — Andorra la Vella, Andorra (TLS) (194km) and Edirne, Turkey (BOJ) (177km) — are both served by airports from other cities. These two destinations received 2.4MM, and 3.1MM tourists respectively, with visitors having to endure connections of around 3-4 hours by car (assuming a 50km/h average speed)!

Best airports by distance to their cities

km to centre (road) rank City Main Airport km to centre (road)
1 Jeju CJU 2.5
2 Heraklion HER 2.9
3 Mexico City MEX 5.3
4 Lisbon LIS 5.9
5 Mumbai BOM 6.5
5 Punta Cana PUJ 6.5
7 Ho Chi Minh City SGN 7.4
7 Nice NCE 7.4
9 Sofia SOF 7.5
10 Florence FLR 8.5

Full table.

Did you know? The airports closest to the main cities they serve are: 3. MEX (5.3 km to Mexico City), 2. HER (2.9km to Heraklion), 1. CJU (2.5km to Jeju).

Worst airports by distance to their cities

km to centre (road) rank City Main Airport km to centre (road)
91 Seoul ICN 48.8
92 Milan MXP 50.3
93 Jerusalem TLV 54.2
94 Kuala Lumpur KUL 66.4
95 Halong HPH 69.8
96 Artvin BUS 77.4
97 Mugla DLM 94.4
98 Makkah JED 103
99 Edirne BOJ 177
100 Andorra la Vella TLS 194

Full table.

Did you know? The airports furthest away from the main cities they serve are: 3. JED (103km to Mekkah), 2. BOJ (177km to Edirne), TLS (194km to Andorra la Vella).

Best regions for airports by distance to their cities

Min, max, median km from main airport to city by region Euromonitor Top 100 Cities 2014

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The median distance from a main airport to the city its serves for each world region is less than 40km. If a short car journey is important, a destination in Australia and New Zealand, Central and South America, or Africa would be a good choice (median distance = 15km from main airport to city).

Secondary ‘airports’

Many budget airlines also use secondary airports, London Luton (LUT) or London Oxford Airport (OXF) around London for example. Secondary airports offer airlines lower operational costs compared to more central, main, airports thus ensuring they can maintain the cheapest fare. Consequently they are typically even further away from the city increasing travel times to and from the airport.

Improvements

To get a wider view I downloaded a dataset from OpenFlights listing 8108 airports and their latitude and longitude. I cross reference the cities listed in this dataset for each airport with cities listed in the WorldMaps dataset used earlier. 2231 cities matched between the two datasets.

I then looked at the point-to-point (as the crow flies) distance between two co-ordinates (city and airport) using a Haversine calculation for these 2231 cities and airports. Obviously the resulting distance from this calculation will be much less than actual road distance.

From these 2231 cities and airports I get a median point-to-point distance of just over 7.1km from airport to city — about 13km less than the median distance by road for the Top 100 cities.

There are a number of different factors that could explain for this, in addition to the difference in calculation. Smaller cities often have more centrally located airports because of low building density, for example.

tl;dr

  • 3 airports are over 100km by car from the cities they serve: 3. JED (103km to Mekkah), 2. BOJ (177km to Edirne), TLS (194km to Andorra la Vella).
  • If you’re visiting a top 100 destination, the median distance from a cities main airport to the city centre is about 20km.
  • destination in Australia and New Zealand, Central and South America, or Africa would be a good choice if a short journey to and from the airport is important (median distance = 15km from main airport to city).

Acknowledgements

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