Speaking at the Caribbean’s State of the Industry Conference in St. Martin, David Scowsill, President and CEO of the World Travel and Tourism Council (WTTC), called on the UK government to abolish the Air Passenger Duty (APD) as it harms the Caribbean economy and the Caribbean community living in the UK.
APD distorts the tourism market and damages the economic prosperity of the Caribbean, which is the most tourism-dependent region in the world.
According to a report by the Caribbean Tourism Organization, arrivals from the UK to the Caribbean are already declining, while those from other source markets are increasing. In November 2010, it was estimated that the average decline in UK arrivals to the Caribbean would be in the region of 15%, once the full impact of the latest rise in APD has taken effect. During the first half of 2011, the impact was even greater at 20% on 2008 passenger levels.
With the adoption of the EU Emissions Trading Scheme from 2012, it is time for the UK government to recognize that APD is a tax whose time has come - and gone. It must be phased out now or at least redesigned.
“APD has always been a blunt instrument and a bad tax. The distance-based system is discriminatory to the Caribbean and the Caribbean people living in the UK. The Caribbean is closer to the UK than the US West Coast, yet it is in a higher band,” said David Scowsill.
The UK government is choking the growth of travel in the form of APD. APD is cited numerously as the reason for the withdrawal of marginal air routes and the losses or failure of travel companies. More importantly, it is dampening demand for travel out of the UK, as many British consumers just cannot afford the extra amount levied on the price of each ticket. This taxation costs the industry £2.5 billion each year and threatens the UK’s international competitiveness status as a tourism destination. Others in Continental Europe have already started to offer packages from other European cities. It is bad for UK GDP and bad for the consumer.
“The UK should learn from their neighboring countries, such as the Netherlands, who repealed a $412 million departure tax, because it cost the economy $1.6 billion. The Irish also plan to cancel their $165 million travel tax, because it costs them $594 million and 3,000 jobs,” David continued.
The UK government claims that the system is designed to offset aviation’s environmental impact and reduce emissions, but there is no evidence that money raised is used to offset any such impact.
The UK treasury is currently evaluating tinkering with the current APD scheme to spread the pain, without reducing its overall income stream.
“Despite economic growth facing many challenges, the travel and tourism industry is still expected to be one of the world’s fastest-growing sectors. But it must have clear support from governments if its full potential to create jobs, increase exports, and stimulate investment is to be realized,” concluded David.