The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The UK’s air tax reforms “play right into the Bahamas’ diversification and international markets” growth strategy, a leading tourism executive yesterday saying it boosted this nation’s airlift connectivity via British Airways’ London hub.

Robert Sands, Baha Mar’s senior vice-president of governmental and external affairs, said the UK government’s decision to place the Bahamas and wider Caribbean on an Air Passenger Duty (APD) ‘level playing field’ with the US would potentially boost passenger traffic transiting through London.

While less than 7 per cent of the Bahamas’ annual stopover visitors come from the UK and Europe, Mr Sands said the APD reduction could act as a “stimulus” and dovetailed with this nation’s target of increasing inbound airlift capacity by 400,000 seats per annum by next year.

This is required to provide access to the extra visitor demand likely created by the $2.6 billion Baha Mar project, and Mr Sands added that the UK move also fitted in to the Bahamas’ strategy of opening up new visitor source markets.

“This plays right into our diversification and growth of international markets, and reducing dependency on North America,” Mr Sands told Tribune Business. “This will act as a stimulus and incentive for traffic to continue transiting through the UK, which acts as a hub for Europe.”

Apart from the direct airlift that could be facilitated from the UK to the Bahamas, Mr Sands said: “It’s also about connectivity; having this connectivity through London as a gateway to Europe and Asia.

“This is a welcome incentive for travel to transit through the UK.” He acknowledged, though, that the volume of stopover visitors coming to the Bahamas through the UK was small in comparison to the US and Canada, likely accounting for “less than 7 per cent” of such arrivals.

The UK’s finance minister, George Osborne, in announcing his Budget this week confirmed that the UK’s current four-band system for the APD was being shrunk to just two bands.

Under the new two-band system, all long-haul flights (over 4,000 miles) will be moved into band B, which means UK customers travelling to the Bahamas and the Caribbean will pay the same tax as if they were travelling to the US. The change is expected to take place on April 1, 2015

From then, the tax on long-haul flights from the UK between 4,001 and 6,000 miles will be reduced by �14 per person, while those over 6,000 miles will be cut by �26.

The move will save a family of four �56 when visiting the Caribbean. Those flying in premium economy, business class or first class will save twice as much.

Mr Sands said the Bahamas Hotel and Tourism Association (BHTA), together with the Ministry of Tourism and Caribbean Hotel and Tourism Association (CHTA), had been advocating such reforms for “at least four years”.

“We’ve always been aware this has greatly impacted the cost of travel from the UK, and travel transiting to the Bahamas over the years,” he added, “and really contributing, directly and indirectly, to the decline in visitor arrivals.

“The fact the Chancellor of the Exchequer has reformed this position is good news. It’s not the total solution; it’s a step in the right direction, and will positively impact travel from the UK and transiting through the UK to the Bahamas in the future.”

Mr Osborne’s rationale behind the reform is that a lower cost of flying makes it more affordable for UK families to travel overseas.

His Budget document stated: “To help British businesses strengthen links with high growth markets, and to go further to make the UK an attractive option for business visitors and tourists, Budget 2014 announces that the Government will reform Air Passenger Duty (APD) by abolishing bands C and D from April 1, 2015.”

“The Caribbean region has finally achieved one of its goals, and will be fairly taxed in comparison to a flight to the US,” said Richard J. Doumeng, president of CHTA.

“CHTA acknowledges the individuals and organisations in the Caribbean and throughout our industry whose efforts and lobbying for tax reform for years contributed towards this triumph. Today we achieved a major victory, as the playing field has been levelled.”

“The disparity in the Air Passenger Duty (APD) has been a critical factor leading to the decline in arrivals from the United Kingdom to the Caribbean. With today’s announcement to a two-band system, the Caribbean region will no longer be penalised,” said Jeffrey S. Vasser, CHA, director-general and chief executive of CHTA.