World Travel & Tourism Council: APD should be scrapped

The World Travel & Tourism Council (WTTC) says the revised UK Airport Departure Tax will discourage long-haul travel.

British Airways tails

The World Travel & Tourism Council (WTTC) says the revised UK Airport Departure Tax will discourage long-haul travel, reducing UK spending in emerging markets, and thereby undermining the government’s support of the Millennium Development Goals.

“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 & Tourism,” said Jean-Claude Baumgarten, President & CEO of the World Travel & Tourism Council (WTTC), adding WTTC’s support to the widespread opposition already voiced by the industry around the world.

“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 travellers 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,” he said.

WTTC maintains that the government’s move to increase the APD is very short-sighted given the current recession, since Travel & Tourism – more than any other sector – has the potential to kick-start the economic recovery by stimulating continued spending on travel, thereby generating much needed employment.

“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,” said Baumgarten.

Even more seriously, the President & CEO of WTTC noted, the fact that the imposition of this tax will reduce UK tourism spending in developing countries 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 & Tourism to run and support their economies.

“Take the example of the Caribbean,” Baumgarten noted. “UK spending on tourism in the region totalled £1.45 billion in 2008 – a significant contribution to these island nations, for which the Travel & Tourism Economy contributes 14.5% of total GDP.”

Despite the challenges of the current recession, the Travel & Tourism industry has not requested any direct public sector subsidies, Baumgarten argued. 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, which is being implemented in two stages, from November 2009 and November 2010, and which primarily penalises long-haul travellers, will mean a 112% rise in departure tax on a flight to Australia from the end of 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 influenza virus.

“Moreover, the move which is intended to help reduce carbon emissions is also likely to backfire,” Baumgarten added, “since passengers travelling 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.”