Eurotunnel uses fare rise to recoup £80m

Eurotunnel uses fare rise to recoup £80m

EUROTUNNEL plans to claw back £80m in lost duty-free revenue over the next 12 months by introducing more fare increases.

The operator has predicted that the loss will cost it £100m over the year to come but believes that £20m will be recouped from retail margins on tax-paid goods and other goods sold inCalais.

It added that it had been anticipating the axeing of the tax perk since 1997 and had already implemented 60% of these rises before July 1, the day after duty-free ended.

The operator said some of the money that it hopes to regain will be made by withdrawing cheap temporary offers.

The announcement came as Eurotunnel announced its six-monthly financial results in which the total turnover was up 16% to £327m, the operating revenue was £318m, an increase of 16% and the operating profit was £85m, up by 77%.

Group executive chairman Patrick Ponsolle said: "Do not underestimate the changes in the market that follow the end of duty-free.

"It has no choice but to raise prices and there is a risk that this will temporarily depress traffic. We believe that it will take 12 to 18 months to recover from the consequences of the abolition."

He added: "Increased transport prices will make up four-fifths of the lost revenue and new retail margins that we have agreed with BAA, who now operate terminal retail outlets, will make up the final fifth."

He said that the price increases will coincide with a bid to stimulate traffic by promoting destinations more heavily.

This will come in the form of establishing more rail services in Europe that will encourage Eurostar traffic from which Eurotunnel gets revenue for tunnel use, and also boosting freight capacity.

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