Taxes and fees on air travel in and out of Grand Cayman are among the highest in the region.
Only the Bahamas, within the Caribbean, charges passengers more, according to a report by PwC on redevelopment plans for Cayman’s airports.
As many as 11 different taxes and fees are charged on a typical return flight from Cayman to Miami, based on analysis by the Cayman Compass.
Of a sample US$440 return fare to Miami, just under US$130 is taxes and fees. Of a US$400 return flight to Kingston, US$120 goes to taxes and fees.
For flights to the U.K., which has some of the highest aviation taxes in the world, the combination of various taxes and fees adds up to more than half the ticket price – around US$700 of a US$1,300 return fare.
The charges levied by the Cayman Islands Airports Authority comes to US$64.60 – a combination of environmental tax, departure tax, terminal fees, security charges and a passenger facilities charge. That remains constant regardless of the length of the flight.
The fees were last raised in 2013, according to the Authority’s CEO Albert Anderson. Mr. Anderson said there are no plans for any further raises in the near future. He acknowledged the fees are high compared to regional rivals, though he said they are still significantly lower than those charged by the U.K., for example. He said the charges reflect the cost of running the airport in one of the most expensive jurisdictions in the world.
The PwC report highlights the money raised through the US$15.85 Passenger Facilities Charge as the principal source of funding for more than $100 million of upgrades to the airports infrastructure over the next 20 years.
But it cautions that there is limited scope to raise any aeronautical fees or taxes to add to the development fund because they are already so high.
“We absolutely don’t want to increase it any more because of that fact,” said Mr. Anderson. “As long as we can collect the outstanding Passenger Facilities Charges, we will be OK to complete the project in the time frame outlined.”
The consultants wrote in their Outline Business Case, “In terms of the level of aeronautical rates being applied, based on feedback from CIAA, the airlines and industry stakeholders, the overall rates levied on flights into Owen Roberts International Airport is already substantial both in the regional and wider global context,” the report says.
The total tax burden on a fully loaded Boeing 737 flight into Grand Cayman is nearly $7,000, second only to the Bahamas in the Caribbean region. Jamaica, Bermuda and Turks and Caicos were the only other islands to top $5,000 in the analysis by the Airports Council International.
Steve Pillar, of Travel Pros Cayman, said taxes and fees have been creeping up unchecked for years. He said many passengers are surprised by the variety and amount of taxes charged, with the additional fees often contributing almost as much as the fare price. He acknowledged that some charges are necessary to pay for infrastructure and security costs, which he said have ballooned since the 9/11 terror attacks in the United States.
Vincent Vanderpool Wallace, the former Bahamas tourism minister and an industry consultant who spoke at the Cayman Executive Outlook conference earlier this year, believes the “jaw dropping” taxes on air travel are inhibiting tourism growth across the region. He believes Caribbean islands should come together as a block to negotiate “free trade” agreements that would cut the taxes and help bring down fares.
“You have to have low-cost, high-quality and frequent air transportation,” he said. He said the focus should be on the U.S. because it is the core market, but similar arrangements within the region could make inter-island travel more viable.
“If you look at the cost of travel within the Caribbean, it is outrageous. Let us begin by eliminating some of these tariffs between countries and I guarantee you will see an explosion in travel.
“When you get it done in the Caribbean, let’s go as a bloc and go talk to the source of our business [the U.S.] and get it done there.”
Cayman Islands Tourism Minister Moses Kirkconnell said record breaking arrival figures suggested the level of taxes and fees on air travel to and from Cayman were not inhibiting travel.
“For several months in 2013, air arrivals reached record breaking highs and the year ended recording the highest arrivals since 2000. For 2014, the upward trend in arrivals has been maintained. The Cayman Islands remains the choice Caribbean destination for the discerning traveler. With this in mind, it appears that Cayman Islands’ airport taxes and fees are not a significant factor when considering travel to the Cayman Islands.”