The announcement last week that the UK will go ahead with its hefty Air Passenger Duty tax hikes in April could have serious consequences for the country’s outbound travel, according to the tourism industry in the UK.
Some 140 aviation and tourism organisations and companies made submissions to the UK Treasury on the APD banding structure. Many called for a change to two-distance band reform, while some expressed support for an alternative three-band structure or retaining the existing four bands. Recognising that no banding structure would be ‘entirely free of anomalies’, the government announced it would retain its current four-band APD structure.
Comments were also raised that the aviation sector, and by default its customers, would be subjected to double taxation once the industry joined the EU Emissions Trading Scheme in 2012. The UK government has, however, admitted that the tax is a ‘revenue raising duty’ first and foremost, generating some £2bn (R25bn) a year, and only secondly for environmental purposes, giving rise to arguments that APD is a ‘flawed’ tax.
Solly Saul, Peltours, explains the hike in APD is unsustainable and will cause a lot of damage to the long-haul market from the UK. He says: “At the moment APD to South Africa is £75pp (R954) in economy class. From early next year, this will rise to £81pp (R1 030) and probably even higher.” Saul explains if you take an average family of two adults and two children, you are looking at paying a levy of £324m (R4 121) before even beginning your holiday. He adds: “The size of the market will shrink by anything between 15 and 20% in the next 12 month.” Saul warns it will affect the trade in general as sales plummet.
Mike Carrivick, Board of Airline Representatives ce, says the UK government has completely ignored the aviation and travel industry’s opinions on APD. He says: “Air travellers are being milked yet again and used as a soft target to prop up Treasury coffers. This announcement is completely at odds with the Chancellor’s wish to invest in the transport infrastructure. No increase is justified. This action demonstrates the continued discrimination against air travellers.”
According to British Airways ce, Keith Williams, the fresh tax hikes will force the airline to cut back on its recruitment plans and delay bringing an extra B747 into service. “APD is by far the highest aviation tax in the world.”
Abigail Shaw, director Bushbaby Travel, admits the flight costs are escalating at the moment, which is causing an issue for travellers to South Africa. She adds however, that for South Africa, the weakening rand offsets the steep flight costs.
Natalia Thomson & Dorine Reinstein
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