Cheapflights has just analysed traffic search patterns for the first six months (H1) of 2009, 2010 and 2011 for searches for Barbados, Jamaica and Mexico and other long-haul destinations. It also analysed its North American traffic searching for London flights for the same periods to indicate how APD may have affected inbound tourism. The figures have to be viewed in the context of the post-recession recovery in global passenger numbers over the period, especially in 2010 when a post-recession "bounce" occurred and passenger traffic increased by an above trend of 8.2% (IATA).
The Government has just completed a consultation period in response to representations by Caribbean governments, the Caribbean Tourist Organisation and also by UK aviation and travel companies about the negative effects the high level of taxation is having.
Introduced in 1994 and raised in 2007 it remained at a sustainable level until November 2009; APD was then changed to a much higher four mileage-band based tax for economy seats and an even higher four-band tax for premium seat passengers including premium economy. It was raised even higher in November 2010, costing a family of four travelling economy to the Caribbean APD of £300.
Following the 2010 increase, APD had risen a massive 275% above pre-2007 rates for all cabin classes to the Caribbean. Apart from affecting tourism-dependent economies, such as the Caribbean in general, the mileage bands also created unfair anomalies; for example APD is more expensive when flying to Jamaica than to Hawaii.
John Barrington-Carver, Head of Cheapflights Corporate Communications, commented: "Clearly, with a respective 51.3% and 25% drop in traffic since the higher rate four band APD was brought in, Barbados and Jamaica have good reason to expect the UK Government to remove the current anomalies in APD.
"A significant concern for the UK economy is the evident drop in searches for the UK from North America and elsewhere over the period. With the strong Australian and Canadian dollars one could have expected an increase in searches for the UK. Instead we have a 5% drop from Australia and a very significant 34% drop seen in Canadian searches for London.
"Domestically, the UK's airport operators are claiming that, according to Civil Aviation Authority statistics, passenger numbers at Britain's smaller airports have fallen by up to 70% in the past four years.
"Cheapflights' analysis appears to bear out the reasons why five other European Governments have dropped APD as revenue raising exercises. Having tried the duty they discovered that such taxes cost the economy more than they raised in revenue.
"High jet fuel prices have clearly increased fares but have not prevented the 2010 post-recession global bounce in air passengers.
"It's therefore difficult to avoid the conclusion that APD is deterring UK consumers from seeking fares to the Caribbean and other long haul destinations. Importantly for the UK economy the opposite is also evident, especially from North America."
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