One Must Hunt for the Best Duty-Free Bargains

Not long ago, duty-free shops at an airport or harbor were a sorry sight. Offering a limited selection of cigarettes, alcohol and perfumes, the stores were the last purchasing resort for travelers before they returned home to taxes and surcharges.

That is no longer the case. Today more than one-third of all French perfume is sold at duty-free stores, and the stores, which gross more than $5 billion a year, have become the most valuable source of airport income.

Duty-free shopping has come a long way since 1947 when a clerk at the Shannon, Ireland, airport got the novel idea of selling Irish whiskey to departing passengers without charging domestic excise taxes.

Now there are more than 800 duty-free shops around the world, where you can buy just about anything you want, from cigarettes and alcohol to sophisticated electronic gear and even a car.

The figures are certainly impressive. But is shopping at duty-free stores worth it?

Bargains for the Informed

More often than not, duty-free and tax-free shopping offer bargains only to the informed shopper. Some duty-free stores are a joke. The duty-free operation at the Nairobi, Kenya, airport has a limited selection of alcohol and coffee, and manages to stay closed more than it is open.

Other duty-free operations are virtually hidden. Some of the best duty-free bargains in the world can be had in Manaus, Brazil’s duty-free port deep in the Amazon jungle. Another great hidden duty-free stop is Port Said, Egypt, a free-zone port at the north end of the Suez canal. But about the only way to get there is by ship, and only if the captain elects to stop in the port instead of transiting the canal.

In some cases, airport duty-free shops try to take advantage of some last-minute passenger shopping frenzies. At Britain’s Heathrow Airport it is not uncommon to see Americans on their way back to New York lining up to buy bottles of 17-year-old Ballantyne Scotch. The Heathrow price of $23 is 50 cents more than it would cost to buy the same bottle in many liquor stores in New York.

Then there are duty-free airport operations that have to be seen to be believed. Of all the duty-free shops, the most acclaimed is at Schiphol Airport in Amsterdam. Not only does it offer bargains on cigarettes and liquor, but great deals on 23 brands of cars and six brands of motorcycles.

The duty-free airport shops in Honolulu and Anchorage claim to be the global leaders in annual sales.

Sometimes a foreign airport will put pressure on its duty-free shops to lower prices in an attempt to attract more connecting passengers.

Earlier this year, when Denmark decided it wanted Copenhagen’s Kastrup Airport to become Europe’s top transfer gateway, it targeted its duty-free prices.

They were soon cut, and in some cases by more than 50%. A $7-a-liter vodka is now $4, 12-year-old Scotch that sold for $18 a liter now costs $13 and a $54 bottle of French perfume can be had for $25.

Outstanding Bargains

The same is happening in Australia. Duty-free shops in Perth are beginning to offer some outstanding bargains. “Our prices on most everything,” said Tom Thomas, owner of Gateway Duty Free in Perth, “are lower than anywhere else in Australia. And on such items as alcohol, cigarettes and cosmetics, a person can expect to pay as little as one-half the price.”

Perth has 22 duty-free shops, each anxiously awaiting America’s Cup fans. “The fierce competition that this many shops breeds causes us all to mark our prices as low as possible,” Thomas said.

One liter of Johnny Walker Black label can be bought for $8.12 in the duty-free shop but it costs $22.53 in a regular liquor store. The same bottle costs $24.25 in the United States. A liter of Tanqueray gin can be had at Gateway Duty Free for $4.52. At a Perth liquor store it costs $18.76 and $16.53 in the United States.

A carton of Marlboro cigarettes could be bought for only $3.41 in a Perth duty-free store, while it costs as much as $12 in the United States.

“We usually price a cosmetic item at one-half what it usually costs in the shops, and then subtract a dollar,” Thomas said. A seven-milliliter bottle of Chanel No. 5 perfume could cost as much as $45 at a department store in Perth. But if you were to buy the same bottle through Qantas’ in-flight duty free, you would pay $22, or if you waited until you were in Perth it would cost you $19.67.

In the area of electronics, Perth’s duty free does not match up to the prices in other countries because as much as a 20% tax is added to duty-free electronics in Australia. A Canon Sure Shot camera costs $155.35 at Gateway. In the United States it runs $149.95. At most camera stores in Hong Kong the same camera sells for $97.

With the possible exception of bottles of rum to be bought, the duty-free shop at the San Juan, Puerto Rico, airport has become a local joke. “Many times,” said one of the clerks, “the flights here do not depart on time. That’s when the people come to the shop--they buy things out of boredom.”

‘Savings’ in Hong Kong

But quite possibly the biggest duty-free joke is the group of “duty-free” shops at Hong Kong’s Kai-tak Airport. All of Hong Kong is duty free. So how could a duty-free store at the airport be a better deal than all the regular duty-free stores elsewhere in Hong Kong? They aren’t. And airport prices are substantially more than anywhere else.

What about duty-free mini-shops on cruise ships and airplanes? While limited in quantities and variety of merchandise, they often sell liquor and tobacco products at lower prices. And on some airlines, such as Alitalia, in-flight duty-free boutiques are well-stocked with Ferragamo, Valentino and Versace ties, scarfs and leather goods.

Recently Pan Am introduced its Inflight Duty Free shop. Not only do the Pan Am shops offer bargains but the airline will throw in as many as 1,200 bonus-mile awards to any member of its WorldPass mileage program making a purchase in flight.

Some airline duty-free deals are good buys, especially flying between cities in Europe and parts of Asia--if you need to buy cigarettes or booze. (Remember, Japan and other countries levy an incredibly stiff tariff on imported items, especially alcohol.)

On some cruise ships, some of the deals are surprisingly good. On a recent cruise aboard the Royal Odyssey the ship’s boutique, which does not claim to be duty free, sold Spanish Lladro sculptures at prices far lower than those promoted by duty-free stores when the ship stopped in Palma de Majorca in the Mediterranean.

U.S. Duty-Free Shops

In the United States, foreigners who are leaving tend to buy in the duty-free airport shops more out of habit than anything else. But few Americans leaving this country ever buy anything at the duty-free stores.

“As a population, Americans are not educated to the savings that duty-free shopping can bring,” said Patrick Grady, manager of the O’Hare Airport Duty Free Shop in Chicago. “Even if they knew what the bargains are, the savings might not be that great. Our tax structures in the United States are considerably lower than in most other countries around the world.”

For example, at most U.S. airport duty-free shops, savings on perfume products are minimal; in other countries the cost differential can be as much as 35%. About the best bargain is cigarettes, and even this purchase might not save you that much. At the O’Hare duty-free shop a carton will cost $9.

Not surprisingly, the Japanese are the best customers at U.S. duty-free stores. “The Japanese buy the most,” Grady said, “especially liquor. They will buy deluxe Scotches and high-ticket Cognacs. Not only do they have one of the highest tax structures in the world, but the Japanese have a very strong present-giving tradition. When they get to the airport they suddenly remember a few people on their gift list.”

Now, some airports are even considering duty-free arrival shops, where passengers can buy their duty-free goods on entering a country instead of when they leave. Already, travelers arriving in certain cities in Australia have this option. And the proposal is under consideration by the British Airports Authority.