An OMAAT reader asked me a question about inflight duty free purchases, and I figured it would be fun to address it here, and also to hear from others.
If you’ve flown internationally with any frequency, you’re probably familiar with the concept of inflight duty free shopping, whereby you can buy all kinds of things, ranging from watches, to perfume, to cigarettes, to chocolate, to airline memorabilia.
While these purchases aren’t taxed, you’d think this would be a pretty inefficient model for selling things. After all, the logistics are complicated and costly. When it comes to retail, you can’t really pay higher “rent” than having your items flown around the world constantly with fairly low turnover.
While duty free isn’t consistently available on international flights, it continues to be popular in some markets, so I wanted to talk about that in more detail.
My thought on the value of inflight duty free shopping
When discussing inflight duty free purchases, I think the first thing to acknowledge is that airlines have a very captive audience onboard flights. People are a lot more likely to leaf through a duty free catalogue when stuck in a metal tube for hours on end, rather than when they’re on the ground.
I mean, having a captive audience was basically the whole business model of SkyMall back in the day, since only at 37,000 feet would you decide that you need the world’s biggest wine glass, or a garden gnome.
The way I view it, there are several situations where people may (sort of) rationally make duty free purchases:
- As an aviation geek, I’ve certainly purchased airline memorabilia from the duty free selection, whether it’s a model airplane, an airline branded stuffed animal, or endless Hello Kitty goodies on EVA Air
- I’m not a smoker, but I know that some people find cigarettes to be cheaper via duty free than on the ground, given how heavily they’re taxed in many jurisdictions
- Perhaps there’s something you forgot to take on your trip, and the convenience (rather than the value) of the duty free catalogue causes you to make a purchase; this could include a universal adapter, sunglasses, etc.
- The combination of boredom and alcohol may cause people to make purchase decisions they wouldn’t otherwise consider on the ground; often you may come across something you like, and make a purchase decision without comparison shopping, even if you may usually take a different approach to purchases on the ground
My impression is that duty free typically doesn’t offer a better value than you’d get on the ground (perhaps aside from tobacco), but I think there’s also a psychology to people thinking that they’re getting a better deal since they’re not paying tax, combined with the lack of ability to comparison shop.
Where inflight duty free shopping is most popular
It’s also interesting to consider how the popularity of inflight duty free shopping differs around the globe. For example, most US airlines have eliminated inflight duty free altogether, because the economics don’t make sense.
However, there are certain routes to and from Africa (particularly West Africa) where duty free sales are through the roof, and literally every single item on the cart is sold without effort. And it’s not just that each person is buying something, but rather there are a few people who try to buy everything, spending thousands of dollars.
Why? Well, some passengers traveling to and from Africa are specifically in the resale business, and many luxury, brand name goods can sell for more in their home country, basically regardless of what it is. Furthermore, many may have leftover cash from their trip, so spend what they have remaining.
So for airlines that pay a commission on inflight duty free sales, I know there’s sometimes a lot of competition for who gets to sell on these routes.
Bottom line
Inflight duty free is a fascinating business. It’s not terribly efficient to essentially fly a “store” with limited inventory around the world. However, in many markets it still ends up being quite profitable, thanks to a combination of boredom, a captive audience, and good value on some items.
Do you ever make purchases through inflight duty free? If so, under what circumstances?
Membership is free and takes no more information than commenting as a guest. Earn status points for good contributions, and see fewer ads as your status grows.