Heathrow boss urges UK government to lift 'ridiculous' ban on duty-free shopping

U-turn would allow overseas visitors to claim back 20% of their purchases

Heathrow Airport's shopping arcade. Getty

Heathrow Airport’s chief executive John Holland-Kaye has urged Rishi Sunak’s government to lift its “ridiculous” ban on duty-free shopping, warning it is hindering aviation sector growth.

During a panel discussion at the Airlines 2022 conference in London on Monday, the boss of the country’s largest airport said the UK had “shot itself in the foot” by scrapping the VAT-free shopping scheme for overseas visitors.

He said the UK had “many big advantages” over other nations in terms of geographical location, size of the economy and language in terms of transatlantic trade.

The UK has a “fantastic, vibrant supply chain” and world-leading airlines and airports and is in a prime position to be a global leader in aviation, Mr Holland-Kaye said.

“We've got the entire value chain for aviation right here in the UK, including great companies like Airbus, Rolls-Royce, the energy companies,” he said. “That's pretty unusual; there’s only three or four countries in the world that have all of that.

“So that means that we should be a leader in aviation.

“But we also have some disadvantages. We are outside the EU, which means we don't have access to that huge virtual domestic market. So that's something that we need to plot all the way through.”

The UK is the only country in Europe that does not offer duty-free shopping. AP

However, he said Britain was also at a disadvantage to its European competitors because it was the only country on the continent to not offer duty-free shopping to overseas travellers.

“We have some things that we're very good at in terms of making us a competitive place, easy place for people to come to, but some disadvantages,” he said.

“So for tourism, we’ve got fantastic tourist assets and yet we shoot ourselves in the foot by banning duty-free shopping, which is a completely ridiculous situation to have in a country that thrives on tourism.”

Speaking to The National, Mr Holland-Kaye said a reinstatement of duty-free shopping would offer the UK a "massive opportunity" for growth.

"We are losing market share to the EU at a time when we need it most," he added.

In 2020, while serving as chancellor in Boris Johnson’s administration, Mr Sunak abolished VAT-free shopping for international visitors, claiming it was a “cost relief” than mainly benefited London.

It had allowed overseas visitors to claim back 20 per cent on their purchases in the UK.

After Kwasi Kwarteng was appointed chancellor in September, he tried to reinstate duty-free shopping. Liz Truss’s government ushered in the scheme “with the aim of providing a boost to the high street and creating jobs in the retail and tourism sectors”.

But the move was reversed by Jeremy Hunt after he replaced Mr Kwarteng.

Major players, including the Association of International Retail and luxury trade association Walpole, had led a campaign calling for VAT refunds for tourists in the UK and airport tax-free shopping.

Decades of flight: Heathrow through the years - in pictures

Heathrow Airport in London, the UK's busiest, has been a travel hub for decades. Here The National takes a look back at Heathrow through the years. All photos: Getty Images

An Airco De Havilland biplane of the British airline, Aircraft Transport and Travel Limited, about to leave on the company’s inaugural flight from Hounslow Heath Aerodrome, later known as Heathrow, to Le Bourget, Paris, in August 1919

Waterlogged runways at London Airport - Heathrow's original name - one week before it became Britain's main aerial gateway to the US in 1946

The new BOAC maintenance headquarters at London Airport circa 1955

The air traffic control room at the airport's new terminal in 1955

US film star Marilyn Monroe with her husband, playwright Arthur Miller, after arriving at the airport in July 1956

An aerial view showing the runways in 1958

The arrivals and departures board in 1960

A new airport gift shop, selling items by Chanel, Wedgwood and Pringle of Scotland, in 1961

The Queen's Building and the No. 1 Building Europa at Heathrow in 1965

The Beatles leave Heathrow for Salzburg in Austria, to resume filming of the movie Help!, in 1965

Passenger terminal gates at Heathrow in 1966

Keith Granville, managing director of BOAC, holding up a model of the Boeing 747 jet, with the new aircraft hangars under construction in the background, at Heathrow in 1969

An aerial view of Heathrow in 1970

Passengers boarding the first BOAC Jumbo Jet 747 used for a commercial flight, from London Heathrow to New York, in 1971

Passengers going through the departure lounge at Heathrow in 1973

Concorde takes off from Heathrow on her first commercial flight for British Airways in 1976

Men at work finalising the Heathrow Central underground station before its opening in 1977

Queen Elizabeth II passing though the Tube gates at Heathrow Central station on its opening in 1977

An aerial view of Heathrow in 1978

Passengers waiting near a departures board in 1979

Holidaymakers waiting in the departure lounge at Terminal 3 of Heathrow in 1981

British Airways employees protesting at Heathrow in 1984

Passengers and staff observe a silence in Heathrow's Terminal One to mark the beginning of the funeral of Diana, Princess of Wales, in 1997

Rower Steve Redgrave at Heathrow with daughters Sophie and Natalie and son Zak after returning from the Sydney 2000 Olympic Games with his gold medal

Spectators watch the last Concorde land at Heathrow in 2003

Fans surround the coach carrying the England rugby team at Heathrow, as they arrived from Sydney after winning the World Cup in 2003

Heathrow's Terminal 2 in 2004

Passengers queue to check in at Terminal 1 of Heathrow Airport during the Christmas 2006 and New Year period

Passengers wait at Terminal 1 on August 10, 2006, after airport security was raised to critical when a terrorist plot to blow up planes in mid-flight from the UK to the US was disrupted by police

Planes queueing to take off at Heathrow in 2007

The new Terminal 5 at Heathrow in 2008

Aircraft at Heathrow Airport in front of the London skyline in 2016

Members of Team GB arrive from Rio de Janeiro at Heathrow, after returning from the 2016 Olympics, which saw Great Britain's strongest performance at the Games in over a century

A composite photo shows planes taking off from Heathrow in November 2016. Forty-two planes were captured between 10.17am and 11.17am and a montage was created from those single images

Items are arranged during an auction preview at Heathrow in 2018. The contents of Terminal 1, which closed in 2015, were being sold

An airline passenger wearing a face mask pushes her bags through Heathrow's Terminal 5 during the coronavirus pandemic in 2020

British Airways employees welcome Olympians returning from the Tokyo Olympics in 2021

Travellers wait in a long queue to pass through the security check in 2022