In March 1947, the Irish Parliament passed legislation that heralded the arrival of the global Duty Free industry.
The ‘Customs Free Act’ meant that normal duty and tax procedures did not apply to passengers purchasing goods at Shannon Airport.
This radical retail development was largely down to the efforts and entrepreneurialism of one man, Brendan O’Regan. He had been the Catering Comptroller at Foynes, which was the refueling point for seaplanes between the UK and US. In 1945, O’Regan was transferred to the airbase at Shannon and it was here that he identified the opportunity to offer goods for sale to transit passengers. However, he took his idea further, managing to persuade the airport authorities that the transit area was not part of the Irish state and therefore goods purchased within it should not be liable for taxes and duties.
Having gained the support of Parliament and seen the legislation passed, in May 1947, O’Regan opened the world’s first Duty Free shop, staffed by one woman, Ms Kitty Downes. Offering a service for Trans-Atlantic airline passengers typically traveling between Europe and North America whose flights stopped for refueling on both outbound and inbound journeys, it was an immediate success.
To begin with, the Duty Free shop was a small kiosk in Shannon Airport’s terminal building and it predominantly sold souvenirs. However, because of the duty free savings, goods were often cheaper than in the country of manufacture, making luxury goods affordable to travelers for the first time. The reputation of Duty Free quickly spread and the product lines expanded to encompass quality international branded merchandise, including brands such as Rosenthal porcelain and Leica cameras.
In 1951, Shannon Airport scored another first with the opening of the first Airport Duty Free Liquor Shop. It began as a ship’s store where airline stewards purchased supplies for re-sale to passengers when the aircraft became airborne. Soon, passengers were allowed to make direct purchases at tax-free prices, albeit on a restricted basis. In the beginning, Shannon Duty Free applied only to liquor and tobacco, but it rapidly spread to encompass the vast range of Duty Free departments familiar to the modern international traveler.
In the 1950s, Duty Free shopping spread to the US and in 1960 two Americans, Charles Feeney and Robert Miller, started Duty Free Shops (now DFS). DFS began by operating in Hong Kong and rapidly expanded globally. By the mid-1990s, Duty Free shopping had spread to overland, sea and air travel in more than 80 different countries.
Contribution to Retail History
Shannon Airport’s Duty Free shop was groundbreaking in that it created a new retail channel and led to the development of a different kind of shopping environment, soon replicated at air and seaports across the globe. Retail concessions within airports have contributed enormously to airport authority revenues and helped drive expansion. The concessions have been able to capitalize on a captive audience. In the early days, unaffordable luxury brands, being sold free of tax and duty were put within the reach of a new audience: the international traveler, further enhancing the cachet of those brands.