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Controversial APD tax system favours Bahamas holidays

  • 16-Dec-11 11:31
  • Bahamas
  • Caribbean News Digital

The majority of UK holidaymakers book flights to the Bahamas via the U.S., potentially making Bahamas holidays more affordable than holidays to other Caribbean destinations as a result of the lower Air Passenger Duty rates that the U.S. enjoys.

Controversial APD tax system favours Bahamas holidays

The Caribbean community is up in arms following the UK government’s December 2011 announcement that it would maintain the existing four band structure to the controversial Air Passenger Duty (APD) as well as increase the rates by eight per cent next April. However, some islands appear to be less severely affected than others. Typically, UK passengers planning holidays to the Bahamas fly via the United States, and as a result they incur the lower priced U.S. banded rates for their Bahamas flights.

Bahamas’ minister of tourism and aviation, Vincent Vanderpool-Wallace, acknowledged that the current system works in the advantage of his country; however, he described the advantage as unsubstantial. The Bahamian minister said of his country’s particular situation, “in the case of the Bahamas we are at a little bit of an advantage but it’s not a substantial advantage compared to the rest of the Caribbean. At least ours is not plugged into that situation”

The current system is inherently biased towards the United States as it is calculated according to the distance between the UK capital and the capital city of the destination. The end result is higher taxes for direct flights to the Caribbean than for U.S. destinations located west of the East Coast cities, despite the fact that they are further away.

Mr Vanderpool-Wallace had the following to say, “I think certainly everybody in the Caribbean is disappointed that some of the changes that were expected didn’t come into effect. I think at the very least the Caribbean region thought they should have been made equal, in terms of the cost of the tax, with the United States. At the very least the Caribbean was hoping that there would be some revision to the banding”. With five per cent of Bahamas hotels' guests coming from the UK, there are real concerns about the implications for the industry should there be a significant drop in the number of Britons booking Bahamas holidays.

The Caribbean region’s leaders have assumed a united front; chairman of the Caribbean Tourism Organisation (CTO), Ricky Skerritt described the recent decision as a “slap in the face” for a region that is heavily dependent on tourism. Some islands have reportedly reduced their hotel rates and package prices to compensate for a reported 25 per cent decrease in the number of holidaymakers arriving to their shores from the UK. Many feel that the APD which has increased by 333 per cent in just six years has contributed to the drop in British holidaymakers.

The current eight per cent rise in APD may now mean cheap deals on Bahamas hotels, in a bid to facilitate more affordable Bahamas holidays. The Bahamas Hotel Association (BHA) has vouched full support for the CTO’s position as BHA president Stuart Bowe stated, “We are very disappointed in the APD, and are very supportive of the CTO and what they are trying to do in trying to address this issue”.

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