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Caribbean organisations call for air passenger tax removal
Richard J Doumeng, president, Caribbean Hotel and Tourism Association (CHTA), and Beverly Nicholson-Doty, chairman, Caribbean Tourism Organization (CTO) Council of Ministers and Commissioners of Tourism, are supporting a recent study by PricewaterhouseCoopers (PwC) which shows that the abolition of the UK’s Air Passenger Duty (APD) could bring a lasting boost to the UK economy, generating a net tax gain for the Treasury and creating almost 60,000 new jobs. The abolition of the tax would have an immediate positive impact on the Caribbean region with major beneficiaries being destinations that are heavily dependent on the UK market.
“For the Caribbean the tax is extra-territorial in effect, and is damaging the region’s tourism economy. For this reason the region has argued that at the very least the discriminatory aspect of the tax, which favours the continental United States, should be addressed by re-banding the Caribbean to the same level as the continental US,” said Doumeng and Nicholson-Doty in a co-drafted joint statement.
“CTO and CHTA would hope that the UK Chancellor studies carefully the PWC report and recognises that APD is damaging the UK travel and tourism industry and by extension the vulnerable economies of the Caribbean, the most tourism dependent region in the world.
“Up to now, despite the weight of UK Parliamentary support for the Caribbean and for the UK industry, the Chancellor has chosen to ignore the evidence that suggests the tax is counterproductive. Let us hope that this is the moment when he takes note of figures independently produced that indicate that APD is hugely damaging and its abolition could create growth.”
Since the advent of the four-band system for the APD, St Lucia, Barbados, Antigua and Barbuda, Cuba and the Dominican Republic have recorded significant decreases in arrivals. Recent analysis by the CTO shows that UK arrivals to the Caribbean fell by 10 per cent in the first quarter of 2012 in comparison to a three per cent fall in UK holiday departures worldwide in the same period.
Almost all the decline has been in the lower end price sensitive part of the market. The Dominican Republic saw almost 13,000 less visitors and Cuba 11,000 less from the UK for example.
Further supporting this is data from the UK’s Civil Aviation Authority (CAA) which makes clear that international passenger traffic between the UK and the Caribbean decreased by 10.7 per cent between 2008 and 2011. This compares with a 1.1 per cent overall increase in the UK’s international passenger traffic over the same period. In addition, the UK Office for National Statistics (ONS) figures indicate that Caribbean arrivals are declining, with a 7.6 per cent fall in visits by air to the region by UK residents between 2008 and 2011.
Supporting the reform in APD for the region could boost tourism, which would in turn help the Caribbean economy at a time when it is in a fragile state. The Caribbean has argued that at a time when the region is experiencing low GDP growth and high levels of debt, and food and energy prices are rising, re-banding the Caribbean would provide a boost to the Caribbean economy in a way that is both valuable and effective.
Tourism is the largest contributor to economic growth in the Caribbean contributing an average of 14.7 per cent to all of the Caribbean GDP in 2011. However in countries that are tourism dependent this figure rises to as much as 74.2 per cent of GDP.
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