The impact of the abolition of duty-free shopping plunged Eurotunnel into the red.

Retail revenues at the Channel Tunnel operator slumped 72 per cent in the last six months.

Eurotunnel reported a net loss of £78 million in the six months to June 30, compared with a net profit of £51 million in the same period last year. Revenues from its retail activities were £26 million, on total turnover of £228 million which fell nine per cent.

But the amount of money made from shuttle services was up 29 per cent at £147 million because of higher prices for cars and coaches and a concentration on growing the freight shuttle business.

Richard Shirrefs, financial director, said Eurotunnel was "cautiously confident" its strategy of increased fares and a focus on the truck business would return the group to profitability.

The company said it was looking to break even in the medium term.

The abolition of duty-free in July last year also led to a sharp drop in the number of people taking their cars, motorcycles and caravans on the Channel tunnel shuttle, which were down 20 per cent in the period.

Coach traffic was down 13 per cent, but the number of trucks carried by the operator increased by 14 per cent to 543,095.

The strategy of increasing fares meant tickets for a car and passengers had risen by between 18 per cent and 23 per cent.

For a car travelling in the high season, this meant a cross-channel ticket would cost £389 compared with £329 last year or £269 compared with £219 last year off-peak, Eurotunnel said.

The company has also cut out special offers and discounted fares.

Eurotunnel said it expected to be able to show it had broken even by April 2003.