British Airways will curtail expansion to the Caribbean if the UK government does not rein in planned tax rises on flying, chief executive Willie Walsh has warned.
Walsh told Caribbean tourism ministers attending a conference in Barbados on Sunday: “BA would like to grow further in this region, but that is at risk from the excessive levels of taxation we face.”
Air passenger duty (APD) on UK flights to the Caribbean will rise on November 1 to £75 on an economy fare and £150 on all other tickets – the second major increase in 12 months on a tax that was just £20 in January 2007.
Walsh said: “The increases in APD reach a new peak at the start of next month. APD on long-haul routes has tripled, and to some destinations quadrupled, in four years.”
He told delegates to the Caribbean Tourism Organisation conference in Bridgetown: “Caribbean destinations suffer disproportionately. Since last November, when APD to the Caribbean went up from £120 for a family of four to £200, arrivals from Britain have fallen by 12%. It seems clear APD has played a major part.
“Even if families find the extra money, they will have less to spend when they arrive. This tax threatens the very fabric of the tourism sector. It threatens jobs and opportunities, and the ability of the islands’ governments to maintain funding levels for education, health and welfare.”
Walsh warned of further rises to come, saying: “The UK government expects revenue from aviation tax this year to total £2.3 billion. In five years it expects receipts to be £3.8 billion, so further increases must be on the horizon.”
He said a proposed switch to a tax on aircraft and airlines’ inclusion in the European Union emissions trading scheme from 2012 would only exacerbate the problem.
“This blinkered policy will have deeply damaging consequences,” Walsh said.
“First, it will price millions of people out of flying, especially long-haul flying to regions such as the Caribbean. Second, the tourism sectors of these islands and many other island economies will be dealt a heavy blow. Third, some airlines will go out of business.
“The policy makers seem to have lost sight of the enormous social and economic benefits of aviation and want to tax, tax and tax again.”
The Caribbean is hit doubly hard by the rise in APD. It is among the most-tourism dependent regions in the world, and it is rated in the higher, band three rate of tax when neighbouring Florida and the rest of the US is in the lower band two.
APD on fares to the US, including to the West Coast and Hawaii, will be £15 less than to the Caribbean from November – and £30 less in premium economy.