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A Look At Where Those Duty Free Shops In Airports Got Started


Our next story takes you to a magical land where there are no taxes or trade tariffs. It is the airport duty-free shop. This utopia of cheap smokes and booze did not always exist. In fact, it took one man to make it happen, as Robert Smith from our Planet Money podcast discovered on a recent trip.

ROBERT SMITH, BYLINE: Hey, I'm just leaving a voice memo for myself. I'm in the Shannon Airport in Shannon, Ireland. And there's something I saw on the wall here - one second. Right here - a picture of the president of Ireland. And next to him is someone called Dr. Brendan O'Regan. He's wearing a natty suit. And it says that Dr. O'Regan was the person responsible for developing the Shannon international airport. And most importantly, he created the world's first airport duty-free shop. Oh, and you should see it - the perfumes, the chocolates, so many scotches. (Singing) So many scotches and whiskeys.

Thank you, Brendan O'Regan. I started to ask around about who this retail genius was. And I was told that back in the 1940s, O'Regan was a caterer at this airport.

BRIAN O'CONNELL: He was a man who was very soft-spoken, quiet, calm. There was no nonsense about him.

SMITH: Brian O'Connell is a local businessman who knew O'Regan. And he says you have to remember that in the old days, Shannon was the closest European airport to the U.S. Planes had to stop there to refuel.

O'CONNELL: In the '40s and '50s, every famous person that crossed the Atlantic almost certainly wound up going through Shannon.

SMITH: So movie stars, presidents, kings and queens...


SMITH: ...They all landed in Shannon.

O'CONNELL: They all had to land at Shannon Airport.

SMITH: And Brendan O'Regan the caterer was waiting for them with Irish whiskeys and mutton. But he starts to think, perhaps these rich folks waiting around might like to buy some local products. And he comes up with a great incentive. On cruise ships, he had noticed, no one had to pay taxes on alcohol - international waters.

O'CONNELL: So he said, wait; now, we're competing with these guys by air. It's not fair that I can't get the same tax advantages they have.

SMITH: What are airplanes, he argued, but ships of the air? And what are airline passengers but sailors of the clouds? Why should they pay tax? In 1951, the Irish government agreed and let him try it out here. There's a picture on the wall of that first store.

They're selling what looks like ham, honey, cheese, jam and eggs. Eggs - can you imagine buying eggs at the duty-free?

The farm products didn't take off, but the whiskey did. Without taxes or duties, alcohol was suddenly one-third the price that it was outside the airport. And other cities started to think, hey, we can do that, too. Amsterdam opened their duty-free in 1957. It came to the U.S. in 1962. Some people would get very rich off of this concept, but not Brendan O'Regan. He stayed in Ireland promoting business and manufacturing here. Brian O'Connell just published a biography of O'Regan with Irish Academic Press, so he's a little biased. But he says that without O'Regan, we would be paying full price for those Toblerones.

O'CONNELL: You'd have shops at airports, but the duty-free industry would not have developed.

SMITH: By the way, I did a little price-checking while I was waiting. Whiskey at the duty-free is no longer a third the price. But I will say alcohol and cigarettes are still a pretty good deal. As for the other products that crowd duty-free, buyer beware. O'Regan would never have dreamed that his concept would become basically fancy airport shopping malls.

UNIDENTIFIED PERSON: Dutch flight 206 to New York.

SMITH: That's my flight. I got to go. Oh, wine gums. I love wine gums.

Robert Smith, NPR News, Shannon international airport. Transcript provided by NPR, Copyright NPR.

Robert Smith is a host for NPR's Planet Money where he tells stories about how the global economy is affecting our lives.