The Caribbean Tourism Organization has hailed plans to iron out anomalies in Air Passenger Duty distance bands as a “small but important victory” for the region.
CTO chairman Richard Skerritt said there had been clear recognition by the Government of the intense industry lobbying efforts over the crucial issue. He was responding to yesterday’s Budget announcement by Chancellor George Osborne that the arbitrary nature of the bands “appeared to believe that the Caribbean was further away than California”.
Also welcoming the delay to the next rise in APD, Skerritt said: “In our various meetings with the British government CTO opposed the idea of a per plane tax for economic reasons.
“We also asked that the existing banding system be reviewed; for no more increases in the APD; and for it to be revised downwards in a new, fairer system. The Chancellor’s speech gives us positive results on all three points.”
The CTO has been officially invited to continue to participate in further APD consultation over the coming weeks.
“In so doing we will continue to argue that the current banding system places the Caribbean at a disadvantage and hurts our economies,” said Skerritt. “We will persist in our efforts to obtain a fairer system of aviation taxation that does not cripple travel to our heavily tourism-dependent region.”
He added: “All Caribbean tourism interests must continue to fight for APD reform in a manner that further removes any competitive disadvantage, and does not hamper our efforts to achieve sustainable growth in tourism, for the benefit of the people of the Caribbean.”
Also responding to the Budget, Graham Pickett, airline partner at accountancy firm Deloitte, said: “The travel and aviation sectors will undoubtedly welcome the Chancellor’s freezing of APD and his proposal to review the whole structure and basis of the tax. Clearly, the UK continues to be the country with the highest taxed aviation sector.
“It would be good news for air passengers if, as part of the review, the Chancellor follows the example of the Germans in the phasing out of APD as the EU Emission Trading Scheme (ETS) tax comes in, so that travelers and holidaymakers are not effectively taxed twice.
“We would also encourage the review to revisit the bands of APD and link them more closely with distance travelled, rather than have the current system which discriminates against certain destinations, such as the Caribbean.”
He added: “The well-rehearsed argument of whether APD should be based on a per plane or per passenger basis continues to rage. Clearly the flag carriers like the current APD scheme, whereas the low-cost airlines would prefer to change the basis to a per plane system.”
Skyscanner.net chief executive Gareth Williams, also welcoming the freeze in APD, added: “We’ve been concerned about the effect of increases on both consumers and the aviation industry as last year already saw hefty tax rises.
“There are some obvious anomalies in the distance banding for example, the Russian Federation west of the Urals is in the lower tax bracket, whilst east of the Urals falls in to a higher banding, so we welcome the banding review which should start today. However, extending APD to include private jets just seems to make sense.”
Aircraft charter broker Air Charter Service agreed, but said: “We believe private jet users will accept a fair level of APD. Some charter companies have been working on the assumption that APD will be charged in line with existing duty levels, or slightly higher.
“If this is true, we believe this will not cause a problem and will be a fair system. However, this has not been confirmed in the Budget, so we await further clarification.”