23 April 2009

UPDATED: Industry reaction to Budget inaction

The travel industry has reacted with anger and dismay after the Government failed to scrap plans for a rise in Air Passenger Duty.

In his Budget announcement today, the Chancellor Alistair Darling made no reference to the travel tax, which is due to increase in November and again in 2010.

Airlines, agents, ABTA and other industry associations had urged the Chancellor to scrap the tax altogether, or at least cancel the second phase of increases.

But despite their pleas, and evidence to show the negative impact on the tourism industry, the Government has refused to back down.

Here's how the industry reacted to the news:

* Thomson Holidays managing director Dermot Blastland said: "We find it outrageous that despite clear briefings explaining why this tax is unfair and unjust, the Government continues to carry on regardless.

"Many holidaymakers will not now be able to afford a few inches of extra legroom on their holiday flight. A family travelling to the Caribbean will have to fork out an extra £600 - a ludicrous amount by anyone’s standards.

"We are also incredibly disappointed that they chose not to address the fact that some of the world’s poorest countries will suffer from a decrease in tourism for the sake of a badly thought out tax."

* Co-operative Travel MD Mike Greenacre said: "It is scandalous that APD has gone from zero to its existing level in such a short period of time.

"Whilst we accept that the industry has to pay its share of tax on fuel, the impact of this draconian increase could be catastrophic."

* Mark Tanzer, ABTA chief executive, said: "This unfair tax already costs air travellers from the UK £2 billion and covers its environmental costs.

"This holiday tax represents a heavy and growing burden on families at a time when they are being forced to reconsider whether they can afford to take a well-earned break.

"As one of the few successful sectors in the UK economy, the Government has targeted the travel industry to plunder, without regard to the damaging impact to jobs."

He said ABTA will continue to challenge the increases, and its anomalies.

"The rise in APD to destinations such as the Caribbean, dependent on tourism, will be as much as 87%, equating to a tax bill of £600 for a family of four travelling to the Caribbean in premium economy in 2010 compared with today’s £160.

"A survey by one of the UK’s largest tour operators shows that 22% of passengers travelling to the Caribbean have a household income of less than £25,000."

* John McEwan, chief executive of Advantage Travel Centres, said the industry should not give up its fight.

"Just because he hasn't mentioned it in the Budget doesn't mean we should give up. We need to keep the momentum going," he said.

"The Chancellor has chosen to ignore the experts and press on regardless. I think he has under-estimated the impact on tourism jobs and the economy."

* Toby Nicol, easyJet’s communications director said: "The Chancellor of the Exchequer has missed the opportunity to give air passengers a much-deserved shot in the arm by refusing to ditch his planned £1 billion raid on the airline industry over the next two years.

"Last year the Chancellor bottled the planned reform of Air Passenger Duty which would have made it a fairer, greener tax and instead simply announced a huge tax raid on hard-working families while continuing to exempt private jets and cargo planes.

"In today’s Budget he should have waived the planned increases in order to help an industry which will be at the forefront of dragging the economy out of recession, but he bottled that as well."

* Mike Rutter, Flybe’s chief commercial officer, said: "As a former transport minister, Mr Darling knows that aviation will play its part in dragging the country out of recession.

"The Government’s own figures show that aviation already pays its own way. By slapping another tax on a British success story like aviation, the Chancellor runs the risk of endangering a recovery that could be led by aviation."

*Here's how the phased increases will impact travel costs:

For flights to Europe, APD will go up by 10% to £11 and to £12 in 2010.

US travellers, the UK’s key market for tourism, will see their taxes rise from £40 to £60 in 2010.

For long-haul visitors travelling over 6,000 miles (including Australia, New Zealand and Malaysia, three key inbound markets), taxes will rise from £40 to £85 in 2010.

Business visitors will also be severely affected with taxes for travellers on any flights above economy rising to anything up to £170 from 2010.

By Bev Fearis

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Your Comments (7)

Surely they would not risk messing loyal customers around

I read from ALG's own press release that they are retaining existing staff, Captains etc which shows a clear intention to continue the same service Hebridean's long term high net worth customers would expect. Of course we cannot forget the Queen is a past client. Such a regular and prestigious clientele would expect no interruptions in such a service and anything else will be the companies downfall. Nice to see ALG in the current climate has confirmed an ongoing un-interrupted service and is honouring existing bookings. It does not make sense for ALG surely to take on what is well known in the cruise industry as a one of the most prestigious UK cruise itineraries and then mess existing customers around. All the best to them and most important of all it's refreshing to see the staff being kept on which is not common in these times.

By Richard Bell, Friday, April 24, 2009
Sorry but...

I cannot see how ALG will be able to keep the high standards that Hebridean guests are used to. ALG completely dropped the ball last year with the 8 month long episode with Discovery's engine problems and Swan Hellenic hasn't exactly done any better with cancelled cruises, generator failures etc etc. I'm sorry if this sounds harsh, but I do not see ALG's buy-out of HIC as a 'rescue', I just cannot see the line holding the standards that it is so renowned for. Time will tell, inevitably, but I am not convinced that this deal is anything other than out of the frying pan and into the fire.

By Alan Brindley, Thursday, April 23, 2009
Impact of budget announcement of holiday home ownership in the UK

There appears to be no consultation between Government and UK tourism industry. The little publicised removal of benefits for holiday home owners will have a major impact. Tourism has been one of the successful industries and for some areas of the UK, has brought them out of bankruptcy. Cornwall in particular has transformed itself in the last 10 years. I agree second home ownership is controversial, but for those owners who let their property as a business, these people have generated wealth and employment for declining areas. They will now reconsider their position, property prices will decline as some owners choose to sell, and those remaining will increase rentals to cover their losses. Net effect 'âœ the decline in UK tourism. And why was the legislation introduced - to keep in line with EEC law - what a farce !

By Danny Crowe, Thursday, April 23, 2009
Does Brown listen to the UK industry?

The New Zealand travel industry is in the extremely fortunate position of having John Key, PM of the newly elected National Government opting to take on the Tourism portfolio in addition to his duties as PM. Key has an extremely successful business background and recognises the role of tourism (both inbound and outbound)as a major contributor to the national economy. He listens to the views of the industry and rorts such as increasing the APD in the guise of financing questionable socialist green policies would not occur. Is the APD increase just another case of 'envy' policies by the Brown admninstration?

By Gary Westwood, Thursday, April 23, 2009
Unfair Tax

Again, just another excuse to increase a stealth tax and hide it behind the "green issues", if the money actually went into the environment or the travel industry it would partially be ok but it does not, just an indication that Labour has got it so wrong and has to find ways of increasing taxes to pay for their mistakes! So now holiday companies will suffer and this will create more unemployment - they never learn!

By LINDA ELSDON, Thursday, April 23, 2009
This never was a green tax

it was always designed as a revenue earner. There is no such thing as a fair tax, they are purely designed to balance the books and governments of all hues will go for the softest option. Why should we be surprised ? With a government increasingly desparate to get money from somewhere they'll be using every 'initiative' they can - perhaps a 'fat tax' a la Michael O'Leary next ??

By Peter Cansick, Wednesday, April 22, 2009
APD AND ELECTION

PM's do not listen the Travel Industry..so lets show them our strenght in coming general election how to listen us ....

By aslan sag, Wednesday, April 22, 2009