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The Caribbean Hotel and Tourism Association (CHTA) strongly condemns the announcement by the British Government on December 6, 2011, that there will be no change to its Air Passenger Duty banding structure, following on the announcement last week that rates to the Caribbean will increase by 8% from April 2012, and that the UK will continue to penalise aspirational travellers travelling in premium economy, who will remain in the same category as First Class.
This decision demonstrates the UK’s complete disregard for the future economic prosperity of the Caribbean and the role of tourism in development. The decision taken by the UK Treasury is in total contrast to the stated policy of the UK’s desire to improve its relations with the independent Caribbean and Britain’s Overseas Territories in the Caribbean.
Given that the UK Chancellor himself drew attention to the discrimination of the APD band structure vis-a-vis the rates for the Caribbean and the USA in his 2011 Budget statement, it is incomprehensible that he has subsequently chosen to continue this economic discrimination against the Caribbean and its community in the United Kingdom.
In 2010, the UK Prime Minister David Cameron noted that “tourism is a fiercely competitive market” and that tourism is “fundamental to the rebuilding and balancing” of the UK economy. In 2011, FCO Minister Jeremy Browne noted that tourism is a “hugely important part of the economy of Barbados.” In that same speech he noted the significance of UK tourists to Barbados. The UK’s international development strategy for the Caribbean has as its number one priority supporting economic growth and increasing Caribbean exports.
The discrimination of the APD band structure is demonstrated by the fact that the APD tax on an economy class ticket from London to Barbados, a distance of 4,190 miles, is US$130 compared to an APD tax of US$104 for London to Honolulu, a distance of 7,220 miles. For flying 72% further to Honolulu the APD charged is 20% less than it is on a flight from London to Bridgetown, even though Barbados is much closer. The APD charged to Barbados on a per mile basis is 114.7% more expensive when compared to the per mile charge to Honolulu. In addition, visitor arrivals from the UK for 2007 to 2010 have decreased by 19.7% while arrivals from all other destinations have increased by 2.2% for the same period.
The Caribbean is the most tourism dependent region in the world with seven of the ten countries in the world most dependent on tourism. Tourism is an export and a key earner of foreign exchange for the Caribbean. Based on historical links with the UK, the Caribbean depends heavily on UK tourists and for several Caribbean countries visitors from the UK are their primary market. The UK decision comes at a time when Caribbean tourism revenues have fallen by US$5 billion in the past three years. The CHTA, working jointly with the Caribbean Tourism Organization (CTO), has repeatedly made these points over the past two years, supported by empirical documentation to the UK Treasury on the negative economic impact of APD on the Caribbean, and has received a sympathetic hearing when it has accompanied Caribbean Prime Ministers and Ministers of Tourism to London. The joint CHTA and CTO submission included alternative recommendations in order to maintain revenue neutrality and at the same time address the discrimination of the APD band structure vis-a-vis the rates for the Caribbean and the USA as already acknowledged by the UK Chancellor.
The failure to amend the APD banding also demonstrates a complete disregard for the impact of APD on the Caribbean community living in the UK which maintains strong links with the Caribbean. Data suggests that they have already been forced to decrease their visits by 20 percent since the four band system was introduced. Increased ticket cost is given as the reason for this. The Caribbean community on the whole are UK voters and their concerns have been disregarded also. In addition both British Airways and Virgin Atlantic have announced schedule reductions to two major Caribbean destinations effective April 2012.
The message today from the UK government to the Caribbean is clear. All of the history, the encouragement to switch from bananas and sugar to focus on tourism as the economic engine of Caribbean growth, and the comments about the value of the Commonwealth seem not to matter to the UK Treasury. The UK’s response today shows that it does not value the two way tourism trade between the UK and the Caribbean which supports jobs and growth in both the Caribbean and the UK. Nor does it acknowledge the extra-territorial impact that this tax is having on Caribbean nations, whose economies and people are also suffering.
The CHTA would like to ask, how many flights need to be cut and how much damage has to be done before the UK recognises the punitive impact of this tax on our exports and the future economic development of the Caribbean? The British Government has heard the arguments but it does not care enough to do the right thing by the Caribbean.
In order to minimise further economic downturn in regards to visitor arrivals from the UK, CHTA is calling on Caribbean Governments to urgently address this unacceptable discrimination against the Caribbean by the UK Government. CHTA remains committed to provide its full support and resources to the Caribbean Governments and CTO in this regard.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
