The International Air Transport Association (IATA), the global trade association that represents 290 carriers, has written to the Mia Mottley-led Government requesting that it rolls back the suite of taxes imposed on the travel and tourism industry.
Regional Vice President Peter Cerdá today said the Quebec, Canada-headquartered body was looking forward to meeting with the Barbados Labour Party administration to point out the dangers associated with the increased fees and charges.
“We did formally request to the Government of Barbados that they reconsider the tax put in place . . . .I would hope that we are able to have this debate and discussion in a sit-down with the Government, that we are able to demonstrate what taxation can do, what can happen when you begin to impose high fees to the industry,” Cerdá told journalists today at a Caribbean Aviation Day conference at the Hilton Barbados Resort.
In her June 11 mini Budget, Mottley announced that as part of an Economic Recovery and Transformation Plan to haul the economy from the brink, tickets purchased for travel from October 1 this year would be subjected to a US$70 Airline Travel and Tourism Development fee for trips to extra-regional destinations and a US$35 levy for travel within the Caribbean.
It was the latest example of Caribbean governments using the airline industry as a cash cow, Cerdá charged, as he sent a chilling warning to Mottley that the tax would have consequences.
“We do believe when you impose these fees they have a negative effect. We have seen it in other parts of the world when these fee structures are put in place and are high, first passenger travel begins to diminish and airlines begin to exit the market. That is something we certainly don’t want to happen in this part of the world,” he said.
The IATA regional representative made reference to a study by the airline trade association – whose members are mostly the major carriers – which found that “each additional US$1 of ticket tax could lead to over 40,000 fewer passengers, US$20 million reduction in expenditures and 1,200 less jobs”.
“While we understand the budgetary challenges facing many of our governments in the region, imposing these heavy fees and taxes on aviation and air travel affects levels of tourism and business travel, the very thing that is required for a vibrant economy. In contrast, the benefits of reducing taxes and fees in air travel are clear,” Cerdá told a room full of industry experts, Government officials and senior airport and airline executives.
Cerdá argued that instead of increasing taxes Barbados and the rest of the region should address the range of issues limiting the region’s competitiveness and growth, including inadequate air connectivity, the absence of a liberalized airspace, poor customer service, and inefficient and aging infrastructure.
“We need competitive taxes, fees and charges, efficient infrastructure, harmonized consumer laws and efficient regulations. Without the Government support in these areas traffic growth will be, to the best of our cases, flat or even begin to decrease over the next couple of years, and those passengers will go to other places around the world,” he warned.
However, Minister of Tourism and International Transport Kerrie Symmonds gave no indication that Government was willing to reconsider the tax, which the administration said was meant to raise US$95 million to fund the Barbados Tourism Marketing Inc, the Barbados Tourism Product Authority, regulation of tourism and civil aviation and the counry’s shareholder responsibilities to LIAT.
Symmonds told the conference he was aware the new measures would cause some level of discomfort, insisting the departure tax was an investment that was needed to tackle some “inescapable realities” and “inconvenient truths”, such as declining infrastructure and a less than satisfactory airport experience, inherited from the previous administration
“While we accept that there has been some disquiet and while we, with the greatest possible reluctance, have gone to the point of instituting the increases in departure tax, we believe that we can treat this as an investment towards making the airport experience and all that has gone with it traditionally, a completely different and enhanced one as we go forward into the future,” Symmonds said.