The Caribbean Hotel & Tourism Association (CHTA) is celebrating the recent announcement by British Chancellor George Osborne that reforms the United Kingdom's current four-band system for the Air Passenger Duty (APD) to a two-band system.
Under the new two-band system all long-haul flights (over 4,000 miles) will be moved into band B, which means U.K. clients traveling to the Caribbean will pay the same tax as if they were traveling to the United States. The change is expected to take place April 1, 2015.
The budget document stated, "To help British businesses strengthen links with high growth markets, and to go further to make the UK an attractive option for business visitors and tourists, Budget 2014 announces that the Government will reform Air Passenger Duty (APD) by abolishing bands C and D from April 1, 2015."
"The Caribbean region has finally achieved one of its goals and will be fairly taxed in comparison to a flight to the United States," said Richard J. Doumeng, president of CHTA, in a written statement. "CHTA acknowledges the individuals and organizations in the Caribbean and throughout our industry whose efforts and lobbying for tax reform for years contributed towards this triumph. Today we achieved a major victory as the playing field has been leveled.”
"The disparity in the Air Passenger Duty (APD) has been a critical factor leading to the decline in arrivals from the United Kingdom to the Caribbean. With today's announcement to a two-band system the Caribbean region will no longer be penalized," said Jeffrey S. Vasser, CHA, director general and CEO of CHTA.
The Chancellor's rationale behind the reform is that a lower cost of flying makes it more affordable for U.K. families to travel overseas.
According to the budget, From April 1, 2015, the tax on long-haul flights between 4,001 and 6,000 miles will be reduced by $23 per person, while those over 6,000 miles will be cut by $43. The move will save a family of four $92 when visiting the Caribbean. Those flying in premium economy, business class or first class will save twice as much.
“I welcome the news that the United Kingdom has decided to level the Air Passenger Duty tax bands following years of concerted lobbying,” said Richard Sealy, Barbados's minister of tourism and international transport, in a written release. “Over more than four visits I undertook to U.K. in order to hold meetings with key government and travel figures I was struck by how forcefully the travel industry came together on this issue. Our key travel industry partners were incredibly supportive in arguing with Barbados against the APD whilst still continuing to advocate travel to our country.”
Sealy noted that The simplification will result in a reduction in the APD charges to Barbados and the Caribbean.
The Caribbean Tourism Organization, the diaspora in UK, colleague Caribbean governments, British peers and MP’s among others must also be applauded for their sustained efforts to reform the APD.
“Now that the distorting impact of the tax has been removed I am confident we will be working with our same loyal and dedicated travel partners to welcome more British visitors back to Barbados in the coming years,” Sealy added.
All long-haul flights will now carry the same, lower, band B tax rate, meaning persons traveling to the Caribbean will pay the same as if they were traveling to the United States.
“This is a major victory for the Caribbean community, which has been intensely lobbying for several years against the UK’s unfair APD band system which makes it costlier to fly to the Caribbean than to rival destinations like Hawaii in the United States, giving them a competitive advantage,” said Dr. Wykeham McNeill. Jamaica’s tourism and entertainment minister. “The unrelenting efforts of the Caribbean Tourism Organization (CTO), Ministers of Tourism across the region, the Caribbean Diaspora in the U.K., the World Tourism Organization (WTO), the World Travel & Tourism Council (WTTC) and other tourism partners, have paid off.”
He also joined the CTO in welcoming the acceptance of the recommendation made by the Caribbean.
"We welcome the announcement and are heartened at the fact that the Caribbean's recommendation for the use of a two band system has now been accepted," the minister expressed.
In addition to adversely affecting tourism-dependent economies like the Caribbean, a 2012 study by the WTTC revealed that removing the APD would result in the creation of an additional 91,000 British jobs and $7 billion being added to that economy in 12 months.
This reduction also provides a significant break for those who have been considering a Cayman Islands or Caribbean vacation. In the past, clients from this market were charged a higher rate of APD to travel to destinations within the Caribbean than to the United States, which put Caribbean destinations including the Cayman Islands at a clear competitive disadvantage.
“As a country we have lobbied independently for this reduction and we are enormously pleased that our efforts have paid off. We have also been supportive of the positioning taken by the Caribbean Tourism Organization who has been lobbying since 2010 for this reduction and other Caribbean nations who have been similarly affected by this restrictive fee,” commented the Cayman Islands’ Minister of Tourism Moses Kirkconnell in a written release. “By having all long haul flights charged the same APD as travel to the US, we anticipate a levelling of the playing field and that this new reduced fee structure in turn should open up travel opportunities from the UK for leisure travelers. The Cayman Islands is looking forward to welcoming these long haul passengers in 2015 and beyond.”