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HomeBusinessPressure mounts on UK to reduce APD

Pressure mounts on UK to reduce APD

Some 70 global travel entities yesterday sent a letter to two UK Members of Parliament calling for a reduction in that country’s Air Passenger Duty(APD), and strengthening Caribbean efforts in that regard.

The communication comes on the heels of the Caribbean Tourism Organization’s(CTO)annual summit, held for the first time in Europe March 13-15. Minister of Tourism Vincent Vanderpool-Wallace represented The Bahamas at the summit in Brussels, Belgium and toldGuardian Businessyesterday that The Bahamas was feeling the impact of the increases.

“We join with the rest of the Caribbean under the CTO’s view that anything that is going to increase the cost of coming into the Caribbean is not something we wish to see happen,”Vanderpool-Wallace said.

Quantifying the precise impact of the increase in APD was difficult, particularly coming out of a global recession and seeing costs like fuel increase, which will also impact on air fares. However, there is no doubt, according to the Minister, that the hike is having a negative impact on travel from the UK to both the country and region.

The region has seen a fall-off in travel from the UK, and a”great deal of it”was a result of the APD hike, Vanderpool-Wallace said. He added that historically, statistics bear out that an increase in air fare results in a reduction in travel.

The Bahamas and Caribbean are particularly vulnerable to increases in air fares because outside of cruising, air travel is the only way to access the island destinations, Vanderpool-Wallace pointed out.

Destinations like Las Vegas and Disney World benefit largely from domestic tourists who can drive to their chosen vacation spots.

Further, the impact of a decrease in tourism travel to Caribbean destinations is amplified due to the significance the sector plays in local economies.

Vanderpool-Wallace said it was important that key decision makers understood that tourism to the region was not a trivial matter, but impacted economies with broad social implications.

CTO Chairman St Kitts and Nevis Minister of Tourism and International Transport, Sen. Rickard”Ricky”Skerritt told delegates in Brussels that the Caribbean is now the most tourism-dependent region in the world.

But the UK may be experiencing its own economic hit from the APD hike, according to the letter sent to George Osborne MP, Chancellor of the Exchequer and Michael Moore MP, Secretary of State for Scotland.

“Whether a convention in London, or an incentive trip to the famed golf venues of Scotland, our companies and clients are choosing France, Ireland and other destinations to avoid the highest aviation taxes that can be found in all of Europe,”read the letter.

The letter’s approximately 70 signatories came from corporate travel departments, travel management companies, and tour operators from countries across the international bands impacted by the APD, including those in the least costly non-European bracket, Canada and the US.

“The world’s travel community is indeed paying keen attention to and advising clients based upon aviation taxation developments in the UK. Demand is clearly being impacted by this growing tax burden. If not reversed soon, the UK will acquire a long-term and hard-to-shake image of being too expensive a destination for many business-travel related activities,”said US-based Business Travel Coalition chairman Kevin Mitchell, one of the organizers of the signatory letter.

The letter charged that the APD had risen 325 percent over the last six years. In that letter, the signatories said the UK is already losing business to European destinations with significantly smaller duties or no such duty at all. The signatories said that they collectively facilitate hundreds of millions of pounds in travel activities.

The UK’s APD is imposed on all passengers departing airports in the UK, and according to a Bahamas Ministry of Tourism release, accounted for 1.9 billion pounds in revenue for the UK in 2009/2010.

It was introduced in 1994 as a”green tax”, and was initially expected to decrease the impact of aviation on the environment. According to the Ministry of Tourism statement, however, there has been no indication as to how those billions were applied.

The 1994 APD taxed passengers based on whether they were traveling to European or non-European destinations. Under it, passengers to The Bahamas, the Caribbean, Florida or Hawaii, for example, all paid 40 pounds in APD.

However, in April 2009 the UK’s Labour government changed the APD, creating four tiers based on how far a country’s capital city was from London. The result was that travelers departing UK airports to Miami or Hawaii paid an APD of 60 pounds for an economy fare, while a visit to Nassau or Kingston, Jamaica would have incurred a duty of 75 pounds–the same amount that a Singapore-bound traveler would pay.

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