Jun 2010 Financial News

Regional tourism officials still concerned about impact of APD

Jun 25, 2010

BRIDGETOWN, Barbados (CMC) — A delay by the British government on the future of the controversial Air Passenger Duty (APD) has not eased the fears of Caribbean tourism officials that the region's main economic earner will not suffer as a result of the tax.

"Certainly, to the extent that the decision to make any change to the prevailing Air Passenger Duty is a worrying one for us at CTO (Caribbean Tourism Organisation) and the region generally," said the CTO's director of research, Winfield Griffith.

"To the extent that a decision is postponed indefinitely, the air of uncertainty will still exist and to the extent that the proposed taxes go into force as planned in November, given the current state of the UK economy and the European economy in general, it will certainly exacerbate the situation now," Griffith said in an interview with the Caribbean Media Corporation (CMC).

The APD, a levy on travel from Britain, is scheduled to rise considerably for long-haul flights, including those to the Caribbean.

On Tuesday, the British Chancellor of the Exchequer — or finance minister — George Osborne, said the delay would allow the Conservative/Liberal Democrat coalition government to "explore changes to the aviation tax system, including switching from a per passenger to a per plane duty, which could encourage fuller planes".

Regional governments, along with the CTO and the Caribbean Community Secretariat, have been lobbying British lawmakers to restructure the levy to make it less "disadvantageous" to persons travelling to Caribbean shores.

The APD is calculated based on the distance of a country's capital city from London, meaning that travellers to the US state of Hawaii are charged less than those travelling to Barbados or Jamaica, for example.

Griffith said Caribbean tourism officials would continue to lobby the British government to consider the implications for heavily tourism dependent destinations in this part of the world.

"The current government had promised before, when they were in opposition, that they would look at a per plane tax as opposed to the Air Passenger Duty ... we recognise that the British government will need to raise taxes and that certainly travel taxes will come in for some increases, but all we are asking is that whatever tax is levied is fairly levelled with our competitors," he told CMC.

"An issue with a tax is always quantum. It is said that they will institute a per plane tax but no one knows the quantum of that tax and to the extent that it is equally onerous when compared with the APD, it would not necessarily be of any help," the CTO official added.

The CTO official pointed out that visitor arrivals from Europe have fallen significantly within the last four months and that the Euro, the main currency across the continent, has been struggling, and as a result having a negative impact on Caribbean tourism.

"This situation, of course, does not lend itself to increased travel in the immediate future," he said, noting that most of the Eastern Caribbean is heavily dependent on the European market, especially the UK market.

On the other side of the Atlantic, ABTA, a travel association, welcomed the government's decision to examine aviation taxes more closely. However it also expressed disappointment that the APD would still increase in another five months.

CMC


Source:
Jamaica Observer
Friday June 25, 2010

http://www.jamaicaobserver.com/news/Regional-tourism-officials-still-concerned-about-impact-of-APD_7739550