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APD on travel to Caribbean ‘shows little impact on sales’

7th August, 2012

Claims that increases in Air Passenger Duty would have severe impacts on travel to the Caribbean are unfounded, a recent article from the travel industry website e-tid suggests. The following extract describes findings from travel agent Hayes & Jarvis:

“Hayes & Jarvis is reporting an ‘unexpected’ long-haul bookings boost, with the Americas and Caribbean doing particularly well. The operator said bookings for the Caribbean are up 37% overall, despite fears passengers would be put off by having to pay more Air Passenger Duty (APD) than other destinations. ..

The Caribbean destinations have argued the current APD banding system is unfair, because passengers to the Caribbean pay more than, for example, passengers to the US, even though flight times are similar. However, H&J said bookings to the Caribbean are showing an increase of 24% after April when the next hike in APD takes place.

Niel Alobaidi, commercial director, said: ‘While there has been negative reporting about the possible implication of the Air Passenger Duty tax in April, we do not believe we are seeing any direct impact from this at all.

Looking at bookings in 2012 to date, the overall value of the holiday is the key driver of customer demand, and customers are not actively breaking down the cost of individual components within the package.’”

This evidence reflects AEF’s view: APD is a very small part of the overall cost of a holiday and is therefore unlikely to have any more than a marginal impact on ticket sales. It is in any case right that passengers who can afford Caribbean holidays should make a contribution to the nation’s stretched finances.

Due to the absence of VAT and tax on fuel, air travel enjoys tax exemptions worth around £10 billion per year, while APD raises less than £3bn.

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