by Brian Major
Last updated: 2:27 PM ET, Fri March 21, 2014
PHOTO: Caribbean Hotel & Tourism Association president Richard Doumeng. (Photo by Brian Major)
Tourism-intensive destinations across the Caribbean are cheering the British government's move to alter its Air Passenger Duty (APD) tax on those traveling to Caribbean destinations from the United Kingdom, savoring a rare reversal of what many viewed as a particularly irksome barrier to Caribbean travel for U.K.-departing travelers.
In a March 19 budget briefing, George Osborne, Britain's chancellor of the exchequer, announced that effective April 1, 2015, the U.K. will abolish bands "C" and "D" in the current four-band APD system, shifting instead to a two-band system. Under the new system, band "A" will cover flights of less than 2,000 miles from London, while band "B" covers flights of more than 2,000 miles from London. The Caribbean will now be included in band B, meaning U.K. residents flying to the Caribbean will pay the same tax as if traveling to the United States, also in band B.
Caribbean officials have long claimed the APD put the Caribbean at a disadvantage versus the United States, which was previously in the lowest-mileage group, while the Caribbean was placed in higher-mileage group C. The resulting tax disparity produced a decline in U.K visitors to the Caribbean, said stakeholders.
"The Caribbean region has finally achieved one of its goals and will be fairly taxed in comparison to a flight to the United States," said Richard Doumeng, president of Caribbean Hotel & Tourism Association (CHTA). "Today we achieved a major victory as the playing field has been leveled."
While the change has no measureable impact on U.S. travelers to the Caribbean, it does reduce the cost of the tax on travel to the Caribbean from the U.K. Indeed, the APD has been the subject of years of intense vocal opposition from Caribbean destinations, hoteliers and tourism association officials.
In a statement, Osborne said the British government opted to change the tax system as a means to "help British businesses strengthen links with high growth markets, and to go further to make the U.K. an attractive option for business visitors and tourists."
The changes do not eliminate the APD, however. A family of four traveling in economy class on a 4,000-mile flight from London to the Caribbean will pay about $551 (which will increase to $564 on April 1), while the APD for the same family flying to the U.S. is $444 (set to increase to $458).
Introduced in 1994 as a means to tax travelers for the damage air travel inflicts on the environment, APD fees have risen steadily in the subsequent years. Since 2007, the tax has increased by 470 percent according to Caribbean Tourism Organization (CTO) officials, who add that APD on flights to the Caribbean have increased by $58 (or 70 percent), since 2009, compared with an increase of $3 (18 percent) from London to Europe and $40 (53 percent) to the USA.
Tourism stakeholders say the APD's impact is particularly damaging in Caribbean destinations that rely heavily on U.K. tourists, including Barbados, the Cayman Islands, St. Lucia, Antigua and Barbuda, St. Kitts and Nevis.
"I welcome the news that the United Kingdom has decided to level the Air Passenger Duty tax bands following years of concerted lobbying," said Richard Sealy, Barbados' minister of tourism and international transport. "Now that the distorting impact of the tax has been removed I am confident we will be working with our same loyal and dedicated travel partners to welcome more British visitors back to Barbados in the coming years."
"By having all long-haul flights charged the same APD as travel to the U.S., we anticipate a levelling of the playing field and that this new reduced fee structure in turn should open up travel opportunities from the U.K. for leisure travelers," said Moses Kirkconnell, the Cayman Islands' minister of tourism. "As a country we have lobbied independently for this reduction and we are enormously pleased that our efforts have paid off."
The tax had also drawn criticism from tourism leaders in Jamaica, among the most-visited Caribbean destinations. Recent critics include Gordon "Butch" Stewart, chairman of Sandals Resorts, who at the February opening of the company's new Sandals La Source resort in Grenada described the APD as among "the ill-conceived taxes that prevent the very best hoteliers from providing the products and services that will result in success for everyone."
"We welcome the announcement and are heartened at the fact that the Caribbean's recommendation for the use of a two band system has now been accepted," added Wykeham McNeill, Jamaica's minister of tourism and entertainment.
Editor's note: James Ruggia offers another take on this issue, illustrating what the change in APD means for American travelers, here.
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