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19 Dec, 2013

Defeat for PATA: UK unlikely to adjust APD

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12.16.2013. Source: West Indies News Network- The British High Commissioner to Barbados and the Eastern Caribbean says she does not expect her government to revisit its Air Passenger Duty (APD) rate to the Caribbean any time soon.

“It’s something that lots of people around the Caribbean have raised with me, and they’re right to do it… I understand some of the impact this is having and how strongly people feel about it, and I think the Caribbean in some ways has a good case to make,” High Commissioner Victoria Dean said on Wednesday.

“My Foreign Secretary William Hague discussed this in Sri Lanka earlier this year… with a number of leaders from this region, and they made very clear to him again their concerns about the impact that this was having, and he said that he understood those concerns, that he was unlikely to be able to change this soon with the way that the UK economy is faring at the moment asking my government to do something expensive isn’t easy to do; but that he understood the concerns and that he took away to have a look at it once again with his colleagues at Treasury,” she told WINN FM during an interview on the Breakfast Show.

EDITOR’S COMMENT

This is another huge defeat for PATA whose CEO Mr Martin Craigs sought to make attacks on the APD a centrepiece of his “advocacy” platform almost from the day he took over in November 2011. Other travel industry leaders have also heaped scorn on the APD. Clearly, it’s all going to come to naught.

Next issue to watch: Higher security taxes right across the travel, tourism and transport chain. Easy pickings for the security contractors. Who’s going to argue against the need to “boost security”?

“I have to be honest with you I don’t think it’s going to change very, very soon, but I do understand the concerns of the Caribbean on this issue,” she added.

The APD is an excise duty which is charged to passengers travelling on flights from the UK. The Caribbean is lumped into the highest tax band that makes travel to the region more expensive than travelling from London to the United States.

Caribbean governments and tourism stakeholders have argued that it is unfair to a region that is tourism dependent, and have been lobbying to have the tax removed. The UK government instead, in April increased the rate.

Dean said on Wednesday she was not convinced that the higher APD was a deterrent for passengers travelling from the UK. She said there was some indication in Barbados that arrivals from the UK were increasing, and she that she was not sure that travellers considered the breakdown of the cost of airfare, looking rather at the overall cost of trip.

  • Geoffrey Lipman

    Dear Imtiaz..i enjoyed your recent article on APD – maybe perhaps because your analysis of December 2013 is not dissimilar to mine of December 2012.which I believe you may have missed. I trust you agree it still remains valid as a strategy.

    An “out of the box” reflection on UK Airport Passenger Duty

    Anyone who seriously thinks the UK Treasury would let go of any part
    of its multi-billion pound annual poll tax on airline passengers must come from
    planet Zog. And with a prospect of long term austerity budgets any idea of
    serious and equitable response is just wishful thinking.

    Despite being introduced as a green tax, presented, with great
    fanfare, as part of the solution to climate change, it never had a green base,
    never spent a penny for environmental purposes and never changed anything
    except income to the UK Treasury. But it brings in billions of pounds a year –
    so it won’t go away.

    So now we have a stand off – the industry undertakes studies,
    submits protests, mounts campaigns, and preaches – mostly to itself – about
    stealth taxes, diversion of traffic to other countries and the obvious
    discrimination. The government holds consultations, sends Ministers to listen
    attentively – even sympathetically; tinkers at the edges by getting rid of
    evident inconsistencies like the crazy geographic banding system, sternly
    rejects the idea of “hypothecation” (using the funds to help the sector) as
    against treasury principles(using the funds to balance the books), and watches
    the money drop into the coffers. By some estimates well over 15 billion pounds have
    been grabbed since inception in the mid 90’s – according to IATA an increase in
    tax payment levels of a whopping, world beating 2,400%

    Even worse, other governments and the UN system quietly watch
    the process, note the size and scope of the sector which we confirm in every
    study, press release or campaign and wonder how they too can produce such an
    ingenious source of revenue, without any voter backlash or equitable
    rationalization process. Too cynical – ask Chancellor Merkle and watch this
    space.

    So here is a modest out of the box suggestion from ICTP – without
    prejudice to our support for the well intentioned industry protests and
    assuming that the UK Government and others are serious about their policies on
    climate change and their desire for genuine public / private sector
    collaboration in this area.

    The industry should request the UK government and any “copycat
    governments” to

    1. Establish virtual “carbon taxed
    accounts” in which they publish the amounts paid by airline passengers to date and every year going forward.

    2. Hold a public annual update and stakeholders review which also
    focuses attention on how to support
    innovations from the sector in relation to climate change and how to accelerate
    government initiatives on air space efficiency, biofuel availability and the
    like

    3. Work openly to seek ways to factor past and future contributions
    into emerging carbon credit programs. As a starter identifying all APD returns
    in the EU system, as an additional airline credit.

    Professor Geoffrey
    Lipman President ICPT December 2012

    ICTP supports sustainable aviation growth – streamlined travel –
    fair coherent taxation