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Olympic year could be crippling for inbound tourism due to aviation tax rises

Olympic year could be crippling for inbound tourism due to aviation tax rises

A new survey of British companies and organisations that depend on inbound tourism finds that the Government’s plans to for a double-inflation increase in the UK’s aviation taxes (already the highest in the world) next year could see bookings in 2012 fall by 4.75%, compared with 2011.

In September the Prime Minister launched the GREAT campaign - a project to promote Britain abroad to tie in with next year’s London Olympics and which hopes to create a £1bn boost for businesses and bring in four million extra foreign tourists.

Overview: A new survey of organisations operating in the UK’s tourism sector (including hoteliers, retailers and restaurateurs) has found that 2012 could see a downturn in inbound tourism to the UK.
Key findings: We asked respondents to estimate what the potential impact of the Government’s planned (10%) Air Passenger Duty (APD) rise in 2012 could have on total bookings for 2012 next year. Compared with 2011, respondents said that the APD rise alone could reduce bookings in 2012 by an average of 4.75%.

What does this mean for jobs and the economy?
Revenue: Last year inbound tourism generated £16.5bn in spending within the UK. A 4.75% decrease on 2010 figures, could represent a loss to the UK economy of £784m in 2012.
Employment: It is estimated that for every £50k spend by tourists in the UK a job is created (and vice versa for spending reductions). Therefore, an increase in APD – causing an estimated 4.75% reduction in bookings – when extrapolated for the whole of the UK’s tourism sector - could threaten 15,680 jobs.

Other findings:
·  30% said that looking ahead to their current bookings for 2012, compared with at the same time last year, next year’s bookings are already down.


·  For those who said bookings were down for next year, half said they are down between 8-10%.

·  Despite the Olympics and the Royal Jubilee in 2012, 87% of organisations say visitor numbers will either be no better or worse than 2011.

·  68% say they are ‘very worried by the planned double-inflation APD rise’

·  Respondents were unanimous in agreeing that ‘The planned double-inflation APD rise, combined with increased fares as aviation enters the EU Emissions Trading Scheme could have a crippling effect on UK tourism in 2012’

·  More than 40% say the APD rise next year will ‘significantly harm our business’ in 2012

Mary Rance, CEO UKinbound said:
“These findings demonstrate that the UK’s tourism sector could lose £100ms next year because of tourists avoiding the UK’s exorbitant aviation tax rates. 2012 has the potential to be a crippling year for inbound tourism to the UK if the Government goes ahead with its double inflationary rise in APD. If Government means what it says - that exports can lead growth in the UK economy - it must now act urgently to halt further increases in this stealth tax on exports.”

Kurt Janson, Policy Director Tourism Alliance said:
“This survey demonstrates that 2012 is going to be a tough year for the UK’s tourism sector. Simply hosting the Olympics and the Queen’s Jubilee does not guarantee that foreign visitors numbers to Britain will increase. The painful truth is that without major changes to underlying Government policy - such as addressing the exorbitant levels of APD - the UK’s tourism sector will struggle to compete with other destinations in attracting visitors.”

Manchester United Museum & Tour Centre calls on Chancellor to freeze aviation taxes:
16 organisations including the Manchester United Museum & Tour Centre, the Historic Royal Palaces and Marriot hotels have called on the Chancellor to re-think Government plans for a 10% increase in aviation duty next year. Open statement and signatories below:

“Inbound tourism is the UK’s third largest export industry, but it is coming under threat. The 29.7 million overseas visitors who visited in 2009 spent £16.5 billion in the UK. This is a 6.3% decline in volume compared with 2008. While, in 2009 the UK fell to seventh in the international tourism earnings league (compared with sixth in 2007) behind the USA, Spain, France, Italy, China and Germany. The Government’s planned double-inflation rise in Air Passenger Duty (APD) will put tourists off coming to the UK at the very time when we need to be encouraging more inbound tourism. The Chancellor still has the opportunity to look afresh at the Government’s plans for aviation taxes ahead of the Autumn Statement. We, the undersigned, implore him listen to the UK’s tourism industry and re-think his plans.”

Damian Preston, Museum Manager Manchester United Museum & Tour Centre
Ann Wilson, Head of Sales, Historic Royal Palaces
Mary Rance, CEO UKinbound
James Cuttica, Managing Director Interopa Holidays Ltd
Michael F. Hodgson Managing Director Maranatha Tours
Helen Bastin, Head of UK Specialist Sales Marriott
Ralph Bennett, Managing Director, Tours International Ltd
Andrew Grieve Managing Director Discover Travel & Tours
Stephen Galpin, Managing Director, CHR Travel
Anak McSporran, Deputy Managing Director Angela Shanley Associates Ltd
John Turner Director International Strategy, Visit Somerset
Stirland Martin, UK Ambassador IGLTA
Bernice Windley, City Cruises
Per Jansson Director AC Travel Group
Chirag Golwala, Lets Travel Services Limited
Marliesa Seifried, UK Connection

Air Passenger Duty – background information: 
*  The overall APD tax take is due to increase significantly by April 2012, if the Chancellor implements his ‘double inflation’ APD increase.
*  The overall, or ‘quantum’, tax take is also due to increase when the UK enters the EU Emissions Trading Scheme (ETS) in 2012. Many EU countries are phasing out their versions of air passenger duty to compensate for the revenue to be raised by the EU ETS.
*  The UK’s top - or ‘Standard’ rate - is some 8.5 times the average of other countries in Europe which still levy a charge.
*  Since 2007, APD for short-haul routes has increased by 140% to EU countries, and for long-haul routes by up to 325%.
*  Currently, a typical British family of four travelling in economy class pays £240 more than most European countries to fly to the USA and almost £50 more to fly to Europe.
*  More than 17,000 people have already written to their MP calling on the Government to scraps its plans for a double-inflation rise in APD.
*  A recent ComRes poll found that 75% of MPs believe that ‘further rises in aviation taxation may price some people out of flying’.
*  In September 2011, 20 cross-party MPs and peers wrote to the Chancellor urging him to re-think his plans.
*  By the Department for Transport’s own figures, aviation taxes exceed the sector’s environmental costs by over half a billion pounds every year.
*  Many European countries including Belgium, Holland and Denmark have abandoned their aviation taxes, due to the negative effects on their economies. In the longer-term, analysis shows that the UK economy will forego £750m of wealth and 18,000 jobs due to the recent rises in APD (November 2010), with around half the extra revenue raised offset by tax revenue losses in the wider economy (source Oxera, 2009)