Tax on UK flight departures will discourage long-haul travel


“The UK Government’s decision to increase the Air Passenger Duty (APD) for departures from UK airports from this coming November, shows that it continues to underestimate the economic importance of travel and tourism,” said Jean-Claude Baumgarten, president & CEO of the World Travel & Tourism Council, adding WTTC’s support to the widespread opposition already voiced by the industry world wide.

“We strongly endorse the government’s decision to review the level of duty proposed for air travel to the Caribbean,” Baumgarten added, “since this is particularly unfair. It is based on an illogical system of bands that means travelers will pay a lower tax to travel to many points of the USA that are much farther from London than any island in the Caribbean. “But we believe the overall APD system should be scrapped.

“Of equal concern is the fact that the APD is billed as an environmental tax, yet none of the money so far collected has been hypothecated and ploughed back into either the environment or the industry.”

Even more seriously, Baumgarten noted that the imposition of this tax will reduce UK tourism spending in developing countries, which undermines the UK government’s claims to be supporting the Millennium Development Goals, aimed at alleviating poverty and generating employment in emerging markets.

“The APD acts as a distortion to free trade,” said Baumgarten, “and this will ultimately work against the Millennium Development Goals by crippling regions most in need of travel and tourism to run and support their economies. Take the example of the Caribbean. UK spending on tourism in the region totalled £1.45 billion in 2008 – a significant contribution to these island nations, for which the travel and tourism economy contributes 14.5 percent of total GDP.”

Despite the challenges of the current recession, the travel and tourism industry has not requested any direct public sector subsidies. But it should not discourage travel – nor use the industry as a cash cow to try to fill the treasury’s depleted coffers. Instead, the government should be looking to provide a supportive policy framework to help sustain demand through the downturn and ensure that valuable aid to developing countries is not cut off by a reduction in travel by UK citizens to those destinations.

The increased APD, being implemented in two stages, (November 2009 and November 2010), which primarily penalizes long-haul travelers, will mean a 112 percent rise in departure tax on a flight to Australia beginning in 2010.

“Clearly, this will have a very damaging effect on demand,” said Baumgarten, “and at a time when demand is already very sluggish due to the recession and factors such as the H1N1 virus. Moreover, the move which is intended to help reduce carbon emissions is also likely to backfire since passengers traveling to long-haul destinations will probably choose to use airports in continental Europe as their departure point for their long-haul flights. This would likely increase short-haul flights out of the UK, and so end up increasing, rather than decreasing, carbon emissions.”