French tobacco tax hits SeaFrance profits

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The cross-channel ferry service fumes over tax hikes, which have halved onboard tobacco revenues and slashed foot traffic by around 40% in 2003

Cross-channel ferry operator SeaFrance has reported a net loss of Eu2.44m (£1.63m) for 2003, citing falling onboard tobacco sales and a related drop in foot passengers as a key factor. The results, against a net profit of Eu14.8m (£9.88m) in 2002, also reflect the price war between SeaFrance and other Channel operators, including Eurotunnel, as demand in the sector continues to fall.

Turnover slipped 17% as revenues from onboard tobacco were halved over the year, Lloyds List reports. A series of dramatic increases in excise rates eroded the price gap between the UK and French domestic markets, and contributed to a 40% drop in foot traffic as UK passengers decided not to go to France to buy cigarettes.

French cigarettes, which had been around 50% cheaper than those on the UK High Street, are now only 10%-20% less expensive, and many EU travel retailers have reported that they are losing tobacco sales to countries with lower taxes. Neighbouring countries Belgium, Spain and Andorra are all able to sell tobacco at a significant discount to French tobacconists.