Boarding Pass Checkouts – the Unintended Consequences

By Brian Moore, Global Retail Consultant and CEO of EMR-NamNews

As with most major retail issues, the great VAT scam began with a low-key investigation started by The Independent because of Oliver Wright’s growing perplexity at being repeatedly asked for his boarding pass at airport shop checkouts. Each time he took off with a top-of-mind question ‘Why?’, and no time to pursue the matter…

Eventually, on a quiet day at the office, he called HMRC’s VAT department and opened up an issue that will haunt travel retailers forever…

Essentially, airport retailers demand boarding cards from travel-shoppers to avoid paying 20% VAT on everything they sell to passengers travelling outside the EU, as there is no VAT due on such goods. Research by The Independent also suggests most of these stores don’t pass the savings on to customers. In other words, the reclaimed tax is set against ‘airport outlet running costs…’

Thus, in a masterstroke of timing, with UK airports packed with holiday traffic including a high proportion of cash-strapped families on their annual break, the news item became a release-valve for years of pent-up frustration and anger felt by air-travellers at all the indignities, manipulation and over-charging endured by those simply attempting to speed up the journey between A and B.

Apart from the inevitable damage caused to retailer brand equity, and possible questions from the authorities re inappropriate VAT collection, the real issue has to be the knock-on effect of most airline passengers refusing to supply what is a valuable source of shopper insight at checkout…

In other words, think about the value of knowing name, destination, flight class and frequent-flyer details of every travel-shopper making a purchase…especially if linked with loyalty data to optimise shopper marketing strategies in some of the world’s most expensive retail real estate…especially if it can be shared with the airline…

Think also about the fragility of shopper-retailer relationships, in a world where passengers held overlong in the security-process, already suspicious that the indirect route to the plane is deliberately designed to encourage and prolong the shopping experience, are known to ‘punish’ the airport by refusing to enter, let alone buy from, airport shops…

Passengers’ mounting anger was then fuelled by the clumsy efforts of retailers attempting to ‘clarify’ the situation in media announcements and via varying levels of explanation by staff at the checkout…

In theory, this issue should have remained a concern only for those travellers to countries outside the EU that were overcharged by 20% on their ‘duty free’ purchases. Instead, the issue has kick-started a ‘citizen’s right’ movement – ‘a campaign of gentle civil disobedience’ – leading not only to refusals to surrender boarding passes at the checkout, but also providing an opportunity for those passengers with plenty of ‘waiting time’ and no intention to purchase, to devote 10 minutes to haranguing shop staff, and even involving more timid strangers at point-of purchase.

Any airport operators and retailers in any doubt as to the depth of consumer feeling need only read the comments-section of the many news reports that continue to cover the issue. Unfortunately for airport retailers, it does not stop at the checkout…

This tip-of-iceberg boarding pass issue is now causing savvy consumers to bring their normal high street shopping behaviours into the airport. In other words, when mobile phones might have been left off as part of the pre-holiday wind-down process, price-comparison apps are being consulted to reveal price-gaps that are even wider than the ‘same as high street prices’ assurances being issued by airport retailers, as the issue escalates…

More importantly, with plenty of time to spare, airport travellers are able to indulge themselves in texting their feelings to friends. In practice this means applying the tell-a-friend rule: If a brand exceeds my expectations, I tell one friend, if short-changed, I tell ten friends…

Then think plane-loads of passengers continuing to spread the word at destination airports currently unaffected by this uniquely UK issue…

In other words, what was meant to be a shop-window for leading-edge retailers is morphing into an outlet for pent-up frustration by vocal savvy passengers that fall out with the staff and vote with their feet…

Meanwhile, suppliers have to ask whether their brands’ presence in airport shops, and possibly the innocent target of consumer anger, is worth the damage, cost and growing inconvenience of travelling by air…

See KamTip: Boarding Pass Checkouts: Managing the Great Fall-out in Travel Retail

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