Tax-Free Airport Shopping: Bargain or Hype?

Ed Perkins on Travel
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Editor's Note: This story was originally published on August 26, 2010. To see the most recent SmarterTravel articles on related topics, please click on any of the following links: airfare, Ed Perkins, Ed Perkins on Travel, shopping, taxes and fees.

If you were suddenly transported to the departure area of Heathrow or Charles de Gaulle, you'd think you were in a shopping mall rather than an airport. In many big overseas airports, you literally can't get to your departure gate without wending you way through an array of shops hawking "tax free" or "duty free" purchases. Do those places really offer good deals, or are they there to feed off a bored and captive audience?

A recent report by Kelkoo UK, the British arm of the online international price-comparison service, helps to answer that question. And Kelkoo's overall answer is "No." In a "mystery shopper" test of 10 major European airports, average discounts ran about 6 percent below prices in local stores, but online sellers gave even better discounts averaging 12 percent below local retail prices.

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Traditionally, tobacco and liquor have enjoyed a reputation as really good "tax free" buys, but that doesn't jibe with the facts. At Amsterdam's Schiphol, for example, a 750-milliliter bottle of 15-year-old Glenfiddich costs 36 euros (about $45). Last month, I paid a California retailer about $32 for the same Glenfiddich. According to Kelkoo data, a 450-milliliter bottle of Johnnie Walker Red costs a minimum of $22 in those European airports—quite a bit more at several—compared with U.S. prices starting at $19. And an iPad with 32-gigabytes of memory costs $800 or more in the airports; as I write this, eBay is selling the 64-gigabyte iPad model for $789. And other electronics manufacturers don't try to control retail prices anywhere near as ardently as Apple.

Kelkoo confirms my own observation over many years: Airports merchandise really isn't "tax free." Instead, airports peg prices for tax-free items just enough below local prices to make at least some of them look like good buys to locals. Basically, tax-free means "no VAT" and VAT averages about 17 percent in Europe, so truly tax-free prices would be some 17 percent lower than local retail. Instead, they're about 6 percent. And that 11 percent difference goes right into the airports' pockets.

Some big airport merchants don't add such high markups, but I don't have any data. Kelkoo didn't check Shannon Ireland or Keflavik Iceland, for example, both traditionally well regarded for shopping deals. I'd love to hear from readers about others.

As with so many other claimed "discount" outlets, your only defense against being gouged is to know your prices before you leave home and compare what you see overseas with those known benchmarks. If you plan to buy liquor, electronics, fashion products, cigarettes, or whatever, get prices at your local Costco, Wal-Mart, or wherever else you shop, or go online. Then you can tell right away which tax-free goods are a good deal and which aren't.

If you're buying liquor, keep in mind that although you can take your bottles onboard as carry-on for your flight to the United States, TSA won't let you carry them on to any connecting flight. Instead, TSA insists that they have to go into your checked baggage—not a happy prospect, given the treatment your bags are likely to get.

Obviously, I'm not a big fan of overseas shopping. But if you're a dedicated shopaholic heading to Europe, Kelkoo says that Heathrow, Berlin/Schoenfeld, and Gatwick have the poorest discounts in Europe; Lyon and Charles de Gaulle are tops.

Keep in mind that the United States is generally a low-tariff and low-tax area, compared with almost all of Europe and much of the rest of the world. Aside from handmade custom clothing in many large Asian cities, I seldom see any overseas deals that tempt me to reach for my wallet. I really don't need to go into the potential risks of trying to get service on overseas purchases of tech products. And unless you can tell the difference between a real emerald and a piece of broken Coca-Cola bottle, don't buy jewelry or gold overseas. But if you really enjoy shopping, go ahead—as long as you know your prices.

Your Turn

At what airports have you found great deals? What airports do you avoid shopping? Share your experiences by submitting a comment below!

 
 
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