Comment: Explorers are needed to challenge APD

The Government has been berated by airlines and the rest of the UK travel industry for failing to put an end to APD misery in his latest budget, see previous story. Here, Paul Wait, chief executive of the Guild of Travel Management Companies (GTMC), looks at the DNA of the decision makers.

One of the issues is to do with the DNA of the people who are responsible for moving this issue forward. As we know when economic times are tough a significant amount of influence is given to those that count money. In the case of Government, the Treasury, and in the case of businesses, the finance departments.

Neither of their functions are commercial or have commercial skills and responsibilities. The drive of the finance people is to cut costs/ save money/stay within budget. The commercial people are driven by building revenues and investing in growth. Are the objectives aligned so that both goals can be achieved? In the case of UK PLC absolutely not and in the case of businesses around the UK, it’s questionable.

There is enough evidence coming to the surface now that proves that exports and therefore business travel is a driver of economic growth and I have been campaigning that business travel should be regarded as an investment not a cost. Most commercial people will subscribe to this and I dare say most finance people won’t.

Over the last 15 years corporate travel budgets have more and more been taken over by procurement and the CFOs.  This is in my view the wrong place for it to reside. By all means have procurement involved in contract negotiations but the travel programmes should sit under a Commercial responsibility which can be accountable for the revenue it produces.

Travel budgets are currently measured by how much you can save or how many trips you can get for the same or less money. But it’s a downward spiral hindering export and growth. Travel budgets instead should be measured by how much revenue is brought into a company.

So what has this got to do with APD.  Well the Government has not heard anyone provide a guarantee that stipulates a reduction of APD will increase the bank balance of UK PLC. Yes, they have had the excellent PWC proposal that models what might happen but it has ifs and buts in the wording and that’s because are we absolutely certain that Finance departments in businesses would spend the APD saving on more business trips to drive growth or would they just bank the savings themselves? Has anyone asked ?

If CFOs in the UK went on record as saying that they would spend the saving on investment in more travel and have them talk to the Treasury then there may be a chance that common sense backed by financial commitment would resolve the issue.

Some people will argue that demand comes before travel and that’s why they wait before they open the purse strings . If you look back into history what economic demand models and instant news availability did the Vikings, Romans and Greeks have or the Portuguese, French and Spanish? Did they wait for the FT or the Economist to say good times ahead, let’s go for it or out of necessity did they get get into their ships and make things happen? ( although I grant somewhat aggressively)

So, in summary, to remove APD and get UK PLC in a positive competitive mindset, the following needs to happen:

• Have CFOs commit to the Treasury that APD savings will be invested in revenue driving business trips that will deliver numbers in the PWC report

• Move the management of business travel into commercial departments and trust the procurement teams, travel managers and TMCs to work closely together to make export growth affordable

• Get into the explorer mindset… but peacefully