Air Passenger Duty 'causes concern'

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Baroness Benjamin outlines how the issue of Air Passenger Duty causes concern to the Caribbean.

The question of Air Passenger Duty (APD) continues to cause great concern in the Caribbean. Over a period of four years, on behalf of the Caribbean and its community in the UK, I have raised the issue of APD at all levels of the British government.

But despite a great deal of lobbying by many interested parties, it was announced there would be no change to the APD bands, no change to the rate (which will increase by eight per cent from April 2012), and no change to the premium economy classification. Furthermore, private jets will still be exempt until 2013, which I believe is wholly unfair. Some felt these decisions were a slap in the face for the Caribbean, as none of the compelling arguments put forward were listened to.

I was recently in the Caribbean and I saw first-hand how people there are being affected by APD. I was told Britain could lose its close and centuries-long association with the Caribbean because now many islands are being courted by China, India, Russia and Brazil, who see the long-term advantages of investment in the area. If we lose this friendship with the Caribbean we will never regain it and there will be a long-term negative impact on Britain.

How did we get to this point, you may ask? After the preferential arrangements for Europe to import bananas and sugar were cut, the Caribbean became the most tourist-dependent region in the world after being encouraged to develop tourism by the EU. So the large increases in APD are particularly damaging, because hotels and airlines have reached a point where they cannot continue to absorb the cost through discounting. This will have far-reaching consequences through the loss of jobs and supplying welfare, and the potential increase in crime, will be heavy burdens on Caribbean communities.

UK travel agents that specialise in Caribbean tourism report a decrease in bookings and APD has been cited as a reason for this. Britain is home to around 800,000 members of the Caribbean diaspora, and they view APD with a huge sense of injustice. Many of them were enticed to come to the UK in the 50s and 60s and spent their lives loyally working in public service.

Also the UK as a hub plays a vital role in growing tourism in developing nations. London acts as transit point for visitors to the Caribbean. Gatwick is a start of the main route to the Caribbean and annually provides 5600 flights supporting 23,000 jobs.

I’m hopeful the Treasury will think again on this issue – because the most unfair and perverse aspect of APD is that it is lower on flights to Hawaii, 7200 miles away from London, than on flights to Caribbean destinations which are typically a little over 4,000 miles away, because of the designated capitals of countries.

So what can be done?

One suggestion is that the Caribbean nominates Bermuda as its capital using the 'Community of Interest Principle', which works on the basis that regional groupings can designate one country as its 'capital city' for aviation purposes. This would require CARICOM to designate Bermuda, which is in the lower US band. In order for that to happen Bermuda would have to become a full (rather than an associate) member of CARICOM. There is no evidence that the UK government is likely to accept this. But what support will they give to the Caribbean to help their economy to avert this impending catastrophe?

I believe APD was not intended to damage Caribbean tourism, but the law of unintended consequences has come into play, and we must consider how government policy, and proposed reforms to it, impact upon developing countries.

Floella Benjaminwas raised to the peerage as Baroness Benjamin, of Beckenham in the County of Kent 2010.