Tax hurts tourism
Published:Monday | October 11, 2010 | 12:00 AM
Janet Silvera, Senior Gleaner Writer
Western Bureau:
The United Kingdom imposed Air Passenger Duty (APD) is having a devastating effect on arrivals to the Caribbean, British Airways Chief Executive Officer Willie Walsh revealed yesterday at the start of the Caribbean Tourism Organi-sation Leadership Conference in Barbados.
Walsh blamed the 12-25 per cent drop in visitor arrivals to the region on the tax, while naming the economic recession as a contributor.
Since last November when APD to the Caribbean went up from £120 for a family of four to £200, he said the region has been feeling the fallout. As of next month, another increase is expected, ranging between 50 and 112 per cent.
"Because of the unfair distance banding on which the tax is based, Caribbean destinations suffer disproportionately," said the British Airways CEO.
The UK government this year expects revenue from its aviation tax to total £2.3 billion. In five years' time, it expects receipts to be 65 per cent higher at £3.8 billion.
According to Walsh, a family of four flying economy class to Hawaii from London, involving a distance of more than 7,200 miles, would incur an APD charge of £240. Yet, the same family travelling to Nassau in The Bahamas, which is not much more than half as far, pays £300 - and double that if they sit in premium economy.
Big UK drop
As a result, he said, the majority of the region has seen larger decreases from the UK than anywhere else in Europe.
In the case of Jamaica, economist Dennis Morrison said visitor arrivals from the UK declined by 2.4 per cent last year and 4.6 per cent in the first half of 2010.
"When you combine the fact that the UK was one of the last economies to emerge from the recession, with the increase in APD, the effect must be debilitating," Morrison argued.
The former Jamaica Tourist Board chairman warned that further increases planned for next month would have an even more serious effect.
And while there is no letting up by the UK government, Walsh on Sunday labelled the tax as one that not only massively overstates the carbon impact of flights to the Caribbean, but threatens the very fabric of the tourism sector - on which so much of the islands' economies depend.
Giving examples of how this will affect the sector, he said: "A family may be able to find extra money to pay the tax, but they will be forced to spend less when they arrive here. So they may stay for shorter periods, eat out fewer times in restaurants, take fewer excursions and spend less on local goods and services."
Noting that the juggernaut of aviation levies don't stop at the APD, he revealed that in less than 15 months, all European Union airlines will be subject to the (EU) emissions trading scheme.
"Estimates of the additional cost to airlines put the total cost at more than £1 billion a year - and likely to rise by £100 million a year after that," said Walsh.
Coupled with that, the aviation sector seems set to suffocate as a recent UN climate change committee suggested that the global industry should pay an annual tax of US$20 billion, as part of its contribution to the $100-billion-a-year fund proposed at the Copenhagen summit to assist carbon reduction around the world.
"Enough is enough," declared the BA official. He said the impact would price millions of people out of flying - especially long-haul flying to regions such as the Caribbean and the tourism sectors of these islands and many other island economies in the developing world would be dealt a heavy blow.