Duty Free stores at the country’s two international airports – Bandaranaike International Airport (BIA) and Mattala Rajapaksa International Airport (MRIA) – saw their sales drop drastically since March this year due to the restrictions in international travel as a result of Covid-19.
The stores, which were reopened for a while in parallel to the reopening of the country following the three-month-long lockdown, are now being operated only at the departure terminals.
As learnt by The Sunday Morning, revenue of most of the Duty Free stores went to zero during the first wave of Covid-19, and at present, only half of the stores are operating.
In most stores, while all employees working on a contract basis have been removed, they are struggling to retain permanent employees until the situation returns back to a state of normalcy.
Generally, Duty Free stores at airport terminals enjoy a captive audience as these retailers have become havens for high-end shopping, with many travellers buying luxury goods, liquor, electronic items, chocolates, and perfumes.
However, since March this year, these retailers have been suffering as the Government-imposed travel restrictions have left airplanes grounded and airports closed.
“At present, we are operating the stores at departure terminals,” BIA Flemingo Duty Free Sales Executive Tharindu Samarakoon told The Sunday Morning.
“We have seen a drastic drop in sales in Sri Lanka, and following the lifting of the lockdown after the first wave, there was a little increase in sales, but once again, after the second wave hit the country, the stores at arrivals dried up as a result of having no passengers. Therefore, the company decided to close down operations at arrival terminals,” he explained.
Samarakoon stressed that this has been the situation for almost all stores at the airport.
Abans Sales Executive Chamara Sandaruwan told The Sunday Morning that there was a drastic reduction in arrivals to Sri Lanka throughout the year due to the Covid-19 situation, adding that in parallel, revenue of their store too has declined.
“We were given several concessions by the Government, and during the months the shops were closed, they (Government) didn’t get the rent from us. Then they also allowed the passengers to arrive in the country following the end of the quarantine period to come and purchase goods,” he noted.
However, at present, these Duty Free stores are not operating, Sandaruwan added.
Statistical analysis
According to the Sri Lanka Tourism Development Authority (SLTDA), the total number of international tourist arrivals to Sri Lanka from January to March 2020 was 507,311. No tourist arrivals have been recorded since April to September due to the termination of all passenger flight and ship arrivals into Sri Lanka from 18 March 2020.
The total number of arrivals recorded from January to September 2019 was 1,376,312. In comparison to January to September last year, a decline of 63.1% has been recorded for the same period in 2020.
As recorded, the largest source market from January to September was India, followed by the UK and Russian. Almost 95% of tourists travelled by air to Sri Lanka. Europe became the largest source of tourist traffic to Sri Lanka with 55.4% of total traffic received from January to September 2020. Asia and the Pacific accounted for 35.7% of total traffic, Americas 6.3%, the Middle East 2%, and Africa 0.6%. In comparison to the period from January to September last year, the highest decline of 70.7% was recorded for the Middle East, while Asia and the Pacific recorded a decline of 69.4%, according to SLTDA. Meanwhile, Africa recorded a decline of 66.3% whereas Americas recorded a decline of 65.5%. A decline of 56.5% was recorded from Europe.
The effect of the outbreak of Covid-19 is evident as all countries have recorded a decline in arrivals from mid-February onwards. However, a noteworthy country-wise aspect is that arrivals from Kazakhstan recorded an increase of 67.8%, while the highest decline in arrivals, amounting to 91.8%, was recorded from Kenya, the statistics revealed.
India, the UK, Russia, Germany, and China were Sri Lanka’s top five international tourist-generating markets during the period from January to September this year. Of this, India was the largest source of tourist traffic to Sri Lanka, with 17.6% of the total traffic received in the above period.
The UK accounted for 10.9% of total traffic, while Russian, Germany, and China accounted for 9.7%, 6.8%, and 5.2%, respectively. Comparing the top 10 markets, the effect of the outbreak of Covid-19 is further evident, as all countries have recorded a decline in arrivals, except for Russia. It is also noteworthy that China has recorded the highest decline at 78.8%.
Way forward
At present, Sri Lanka has 180 Duty Free stores, out of which almost all, except one or two, have been temporarily closed down, The Sunday Morning further learnt.
Under the existing duty-free allowance, an adult who spends more than a year overseas is entitled to an allowance of $ 1,000 for the goods bought from abroad and $ 1,750 for the goods bought at Duty Free shops at the airports here.
A person returning after a stay between 90 days to 365 days abroad is entitled to an allowance of $ 500 for goods bought from abroad and $ 625 for purchases at Duty Free shops. A person who has stayed less than 90 days is entitled to an allowance of $ 125 for goods bought from abroad and $ 187.50 for Duty Free purchases.
In light of the current situation, Airport and Aviation Services (Sri Lanka) Ltd. (AASL) Chairman Maj. Gen. G.A. Chandrasiri told The Sunday Morning that the AASL has incurred a huge loss due to the non-operation of Duty Free shops at airports.
When asked for the total loss incurred, he stressed that the figures were high and did not reveal it. “We have given concessions for all Duty Free store owners and we are not getting their rent, as they don’t have sales,” he said.
“There are 180 stores and right now, this is a situation the entire world is facing,” Maj. Gen. Chandrasiri said, adding that the AASL has now focused on cargo handling.
“On Thursday, we had only 12 arrivals and around 400 departures. We are handling the situation as well as possible until it returns back to normal,” he added.
“At present, we are operating the stores at departure terminals,” BIA Flemingo Duty Free Sales Executive Tharindu Samarakoon told The Sunday Morning.
“We have seen a drastic drop in sales in Sri Lanka, and following the lifting of the lockdown after the first wave, there was a little increase in sales, but once again, after the second wave hit the country, the stores at arrivals dried up as a result of having no passengers. Therefore, the company decided to close down operations at arrival terminals,” he explained.
Samarakoon stressed that this has been the situation for almost all stores at the airport.
Abans Sales Executive Chamara Sandaruwan told The Sunday Morning that there was a drastic reduction in arrivals to Sri Lanka throughout the year due to the Covid-19 situation, adding that in parallel, revenue of their store too has declined.
“We were given several concessions by the Government, and during the months the shops were closed, they (Government) didn’t get the rent from us. Then they also allowed the passengers to arrive in the country following the end of the quarantine period to come and purchase goods,” he noted.
However, at present, these Duty Free stores are not operating, Sandaruwan added.
Statistical analysis
According to the Sri Lanka Tourism Development Authority (SLTDA), the total number of international tourist arrivals to Sri Lanka from January to March 2020 was 507,311. No tourist arrivals have been recorded since April to September due to the termination of all passenger flight and ship arrivals into Sri Lanka from 18 March 2020.
The total number of arrivals recorded from January to September 2019 was 1,376,312. In comparison to January to September last year, a decline of 63.1% has been recorded for the same period in 2020.
As recorded, the largest source market from January to September was India, followed by the UK and Russian. Almost 95% of tourists travelled by air to Sri Lanka. Europe became the largest source of tourist traffic to Sri Lanka with 55.4% of total traffic received from January to September 2020. Asia and the Pacific accounted for 35.7% of total traffic, Americas 6.3%, the Middle East 2%, and Africa 0.6%. In comparison to the period from January to September last year, the highest decline of 70.7% was recorded for the Middle East, while Asia and the Pacific recorded a decline of 69.4%, according to SLTDA. Meanwhile, Africa recorded a decline of 66.3% whereas Americas recorded a decline of 65.5%. A decline of 56.5% was recorded from Europe.
The effect of the outbreak of Covid-19 is evident as all countries have recorded a decline in arrivals from mid-February onwards. However, a noteworthy country-wise aspect is that arrivals from Kazakhstan recorded an increase of 67.8%, while the highest decline in arrivals, amounting to 91.8%, was recorded from Kenya, the statistics revealed.
India, the UK, Russia, Germany, and China were Sri Lanka’s top five international tourist-generating markets during the period from January to September this year. Of this, India was the largest source of tourist traffic to Sri Lanka, with 17.6% of the total traffic received in the above period.
The UK accounted for 10.9% of total traffic, while Russian, Germany, and China accounted for 9.7%, 6.8%, and 5.2%, respectively. Comparing the top 10 markets, the effect of the outbreak of Covid-19 is further evident, as all countries have recorded a decline in arrivals, except for Russia. It is also noteworthy that China has recorded the highest decline at 78.8%.
Way forward
At present, Sri Lanka has 180 Duty Free stores, out of which almost all, except one or two, have been temporarily closed down, The Sunday Morning further learnt.
Under the existing duty-free allowance, an adult who spends more than a year overseas is entitled to an allowance of $ 1,000 for the goods bought from abroad and $ 1,750 for the goods bought at Duty Free shops at the airports here.
A person returning after a stay between 90 days to 365 days abroad is entitled to an allowance of $ 500 for goods bought from abroad and $ 625 for purchases at Duty Free shops. A person who has stayed less than 90 days is entitled to an allowance of $ 125 for goods bought from abroad and $ 187.50 for Duty Free purchases.
In light of the current situation, Airport and Aviation Services (Sri Lanka) Ltd. (AASL) Chairman Maj. Gen. G.A. Chandrasiri told The Sunday Morning that the AASL has incurred a huge loss due to the non-operation of Duty Free shops at airports.
When asked for the total loss incurred, he stressed that the figures were high and did not reveal it. “We have given concessions for all Duty Free store owners and we are not getting their rent, as they don’t have sales,” he said.
“There are 180 stores and right now, this is a situation the entire world is facing,” Maj. Gen. Chandrasiri said, adding that the AASL has now focused on cargo handling.
“On Thursday, we had only 12 arrivals and around 400 departures. We are handling the situation as well as possible until it returns back to normal,” he added.