Retail News Update

British Airways is wheeling the trolley dolly into the 21st century and launching an online duty-free shopping service that will allow it to deliver perfumes, watches and electrical goods to homes all around Britain.

Customers will be able to buy the full duty-free range from The HighLifeShop, with the exception of cigarettes and alcohol, regardless of whether they have bought a BA flight.

BA, which has been running trials of the service over the past six months, will pay the VAT on the goods to keep prices at similar levels to those charged on its aircraft.

However, the move to enter the burgeoning home-shopping market could put the airline on a collision course with BAA, the airports operator, given the latter’s vast retail investment at Heathrow’s Terminal 5.

The promise to deliver to homes within a matter of days is also likely raise a wry smile with passengers furious over the airline’s poor record on lost luggage in the past year.

Richard Cushing, retail business director of BA, said: “Like all things, we have tested the service to gauge what customers think and there has been an excellent reaction.

“It is an extension of what we offer on board and we’ll be offering good-quality products and quality prices.

“It will never be a major part of what we do, we are an airline, but we wouldn’t be doing this if it didn’t make commercial sense.”

Mr Cushing said that British Airways would soon be adding “pre-flight essentials” such as eye masks and pillows to the website as well as luggage. The current range consists of more than 370 products, including Swarovski pendants and Accurist watches.

However, analysts were sceptical about how successful the website will prove. One said: “It’s an interesting move but I doubt the likes of Argos will be too bothered at this stage.”

The move by BA marks the latest in a series of initiatives by airlines to generate more money by selling ancillary services such as car insurance and hotel packages as they battle spiralling fuel costs.

Ryanair, the Irish no-frills carrier, generates about 16 per cent of its total revenue from ancillary services and has been testing an in-flight mobile phone service.

BA issued a profits warning two weeks ago, triggering fears of a global downturn in the airline industry. EasyJet issued a warning on Wednesday.

The home-shopping market is the fastest growing part of the retail sector. IMRG, the internet monitor, said a record £4.5 billion was spent online in January.

BA, like other airlines, began selling soft toys, alcohol and cigarettes on its aircraft in the early 1970s. Its first in-flight brochure, Shopping the World, was introduced in 1973.

BA started selling electronics after 1999, when the abolition of intra-EU duty-free shopping forced up the duty on the more traditional in-flight products.

Heavy duty

— Ferrovial, the Spanish owner of BAA, sold its World Duty Free division to Autogrill, of Italy, for £543 million this month

— Duty-free purchases on journeys within the European Union were abolished after June 30, 1999

— There is no limit to the amount of duty-free goods that can be brought into the UK, but travellers with more than 800 cigarettes, 10 litres of spirits, 90 litres of wine and 110 litres of beer may be asked by Customs to show that the goods are for their own use