Study Prompts Caribbean Tourism Official to Support Abolishing of UK Air Passenger Duty

caribbean beachRichard 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) that shows that the abolition of the U.K.'s Air Passenger Duty (APD) could bring a lasting boost to the U.K. 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 U.K. 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.

The statement continues, "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 U.K. arrivals to the Caribbean fell by 10 percent in the first quarter of 2012 in comparison to a 3 percent fall in U.K. 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 fewer visitors and Cuba 11,000 fewer from the U.K. for example.

Further supporting this is data from the U.K's Civil Aviation Authority (CAA) that makes clear that international passenger traffic between the U.K. and the Caribbean decreased by 10.7 percent between 2008 and 2011.  This compares with a 1.1 percent overall increase in the U.K.'s international passenger traffic over the same period.  In addition, the U.K. Office for National Statistics (ONS) figures indicate that Caribbean arrivals are declining, with a 7.6 percent fall in visits by air to the region by U.K. 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 Caribbean 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 percent to all of the Caribbean GDP in 2011. However, in countries that are tourism dependent this figure rises to as much as 74.2 percent of GDP (Antigua and Barbuda).

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