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The Honolulu Advertiser
Posted on: Friday, August 11, 2006

New ban may hurt airport retailers

 •  Hawai'i's economy expected to endure

By J.W. Elphinstone
Associated Press

NEW YORK— The ban on liquids and gels from carryon luggage after a foiled terrorist plot may pinch airport retailers that mostly sell drinks and beauty aids, experts said yesterday.

Worldwide sales of duty free shops totaled $27 billion in 2005, according to industry-tracker Group Generation, with alcohol, cosmetics and perfume representing 50.5 percent of total sales. A prolonged ban could take a significant chunk out of sales, and threaten those shops specializing in wine and spirits or cosmetics.

"The uncertainty of it and the uneven enforcement of the ban could cause a 30 to 40 percent decline in sales at some stores," said C. Britt Beemer, chairman of America's Research Group.

In Hawai'i, DFS U.S. Group vice president Sharon Weiner said the duty-free business is proceeding as normal because the purchases are distributed to passengers in a sealed bag as they board the plane. She said DFS is working with state and Transportation Safety Administration officials to allow passengers to purchase liquid beauty products sold in DFS' retail concession.

"We're very confident that it will be worked out," Weiner said. "The airport system here has been extremely cooperative with us."

Alcohol and perfume are the two largest selling products in many duty free stores.

"I'm not sure if you can completely mitigate the loss of the sales. This could become a serious problem over the long-term," said Michael Payne, executive director at the International Association of Airport Duty Free Stores.

Yesterday, the U.S. banned all liquids and gels from carryon luggage following the discovery of a terrorist plot in Britain. The plot hinged on terrorists smuggling onboard explosive liquids and detonators hidden in soda cans.

"Right now, we're waiting for more clarification as the TSA evolves its requirements," Payne said. "But we'll do whatever needs to be done to make sure it's safe to fly."

Other retailers may find the ban boosts their bottom lines, according to Scott Krugman at the National Retail Federation.

"Restaurants will end up benefiting from this because people will eat and drink before getting on their flights," Krugman said. However, Krugman expects only a short-term impact on retailers.

"Once we know which regulations are permanent and which ones are temporary, we'll see these stores adapt what they're selling and how they're selling," he said.