St. John’s, Antigua: British carrier, Virgin Atlantic’s Chief Executive, Steve Ridgway in a letter to the British Chancellor George Osborne, has indicated that the airline will temporarily absorb “hundreds of thousands of dollars” to shield passengers from Britain’s Air Passenger Duty (APD) upcoming increase which will be effective April 1, according to an Observer report.
Air Passenger Duty (APD) rises by 8 percent; this means that in the next two months British travelers to the Caribbean region which falls into the 4,001–6,000 miles band, will pay US $257 extra on a ticket, up from US $238.
According to the Observer report, despite strong concerns expressed by Virgin Atlantic and the wider aviation industry, the rises will be retrospective and will also apply to passengers who booked tickets before the new rates were announced.
Ridgway urged the chancellor “to use next month’s budget to correct the strangling effect of the tax on economic growth and tourism.” The carrier’s letter highlighted the anti-competitive nature of aviation tax in the UK, with the nearest comparable air tax rates in Germany set at approximately half those of Britain’s. The UK’s Office of Budget Responsibility forecasts that the APD will provide £3.2 billion (US $4b) receipts by 2015 and £3.8 billion by 2017. The executive warned that the UK risks losing business and tourism to its European rivals who offer more attractive taxation, visa and VAT rates. Virgin Atlantic reminded the British chancellor that while the take from the APD has been steadily climbing by US $797 million last year, the number of visitors arriving by air in the UK has fallen 15 percent. Meantime Virgin Atlantic’s owner, Sir Richard Branson, said on the company’s website that “the Government’s plans to increase taxes on air passengers are out of control.”
The Observer also reported that the Caribbean Tourism Organisation (CTO) continues to lead the region’s fight against the tax, which even the airlines have described as discriminatory.
While most Caribbean countries are the same distance from London as many major US states, they are charged a higher tax because they are in a different band.
CTO-issued statistics from 23 countries show that the region experienced a decline from the United Kingdom for the third straight year. The drop was largely due to a weak economy and increases in the APD. Last year Virgin Atlantic joined forces with British Airways, Easyjet and Ryanair to highlight the negative impact of the tax on UK GDP and to call for its abolition.
The British Government is yet to respond favorably to a call from the carriers for an independent report into the impact that APD is having on the UK economy, the Observer report stated.
