Taxation to blame; Florida to pick up the slack
Taxation is forcing British Airways to reduce its Caribbean capacity for the summer of 2012, said Keith Williams, chief executive officer.
Mr. Williams told delegates at the Caribbean Tourism Conference that services to Florida locations will be increased. Services to the United States are taxed around 20 per cent lower than those in the Caribbean due to the UK duty, which places the Caribbean region in the highest band of duty.
The industry does expect to hear the outcome of a government consultation report in October, said the CEO, which he hoped would involve a fairer banding system. Allied to this, said Mr. Williams, the Emissions Trading System comes into force from January 2012.
“This will have an impact on businesses … we are seeking a reduction in Air Passenger Duty to offset it.”
He said airlines operating through the UK incur the highest taxes in the world. A further increase in the passenger duty is expected in the government’s autumn budget, which would jeopardise Caribbean routes.
The tax increases have been dampening demand, noted the airline boss, which has meant the Caribbean has been unfairly penalised.
Economy slowing
Mr. Williams also told delegates that BA had increased capacity during 2011, but due to the UK economy growing at a slower rate than anticipated, the company acknowledged it had been done too early.
“It was right in my mind to reduce capacity to better match supply and demand,” he said.
Also in his keynote address, Mr. Williams said while arrival numbers were increasing, which showed the industry was recovering slowly, expenditure per person was down and UK travellers were taking shorter holidays of around 10 days rather than two to three weeks, according to preliminary data.
Leisure travel was still governed by price and figures by the British Retail Consortium had also noted conditions were difficult for retailers. Unemployment is stubborn and linked to cuts by the government in the public sector, to which the private sector has not yet responded.
Globally, he said, consolidation had enabled BA to better withstand shocks and invest in new products and services. There was still a significant demand for premium travel, but it was difficult to bring in and retain the loyalty in the face of intense competition. All in the tourist industry should be working on seamless travel experiences and customer service.
The reputation of the region can be affected by the reputation on the Internet and travellers are also more educated to ethical and green holidays so it was up to everyone involved in the industry to put policy in place to reduce the tourism impact. British Airways, for example, is working on a system of biofuel created from London’s household waste which is anticipated to come online in 2015, he said.
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