Analysis: APD continues to hurt market to the Caribbean

Analysis: APD continues to hurt market to the Caribbean

APD continues to hurt the UK market to the Caribbean. Ian Taylor reports

UK arrivals to the Caribbean fell 10% in the first quarter of 2012, amid continuing anger at the high rate of Air Passenger Duty (APD) on fares to the region.

Caribbean Tourism Organisation (CTO) figures show a 25,000 drop in UK numbers to the islands for the January to March period, following a fall last year for the third year in succession.

However, almost all the decline this year has been to the Dominican Republic and Cuba, suggesting it is the lower end of the market that is suffering. The Dominican Republic saw almost 13,000 fewer visitors and Cuba 11,000 fewer.

Jamaica and Barbados also saw declines, but other islands showed an increase in UK arrivals, including Saint Lucia, Antigua, and St Vincent and the Grenadines.

UK holiday departures worldwide fell 3% in the first three months of 2012 – one-third the rate of decline to the Caribbean – while the fall to the region last year came against a 3.3% rise in total visitors to the Caribbean.

However, the Caricom group of islands – largely made up of former members of the British West Indies and the most dependent on UK arrivals – did see an increase last year.

The figures appear to confirm fears that APD is squeezing the Caribbean market, with the tax on fares higher than to the US. But the effect is not uniform.

Latest figures from the UK tax office, HM Revenue & Customs, confirm a fall in the number of passengers paying the band C rate of APD – the rate to the Caribbean – this year.

HMRC reported a 0.6% increase in total APD payments by passengers in the three months to May, but a 0.8% decline in passengers making band C payments. By contrast, band B payments (to the US and the Middle East) rose 1.3%.

The CTO greeted confirmation that the UK would retain the existing APD bands last December as “a slap in the face”.
CTO chairman Ricky Skerritt, minister of tourism for St Kitts and Nevis, said: “It dismisses all the research the CTO has provided the British government over the past three years.”

However, some Caribbean islands stand accused of exacerbating the problem by adding taxes of their own.

Jamaica introduced a $20 (£12.50) per person arrival tax in August and added a room occupancy tax of $1‑$4 (60p‑£2.50) a night in September. Antigua recently increased airport taxes, raising the charge per passenger from $63.75 (£40) to $93.75 (£58).

British Airways confirmed it has switched flights from the Caribbean to the US this year because of the impact on demand.

Colm Lacy, BA’s head of commercial at Gatwick, said: “We took three services from the Caribbean this summer to add extra Orlando services because APD is £64 cheaper for a family of four. We’ve seen the seats filled. We feel we made the right decision.”

BA will switch further capacity in October to start a three-times-a-week service to Las Vegas from Gatwick. Lacy said: “APD is cheaper to Las Vegas, although the flight is significantly farther.”

Holidaymakers to the Caribbean pay £81 APD on economy fares, when the rate to Orlando or Las Vegas is £65.
Rates to the region will rise again next April to £83 in economy and £166 in premium economy.



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