Talking Tourism: UK Air Passenger Duty increase put on hold

Welcome news from the UK is that the British government has decided to delay the APD (Air Passenger Duty) increase until next year. Delivering his annual budget speech in the House of Commons, British Chancellor George Osborne said yesterday that “with the hefty duty rise last year, and with the cost pressures on families, we think it would be fair to delay this April’s Air Passenger Duty rise to next year.”

National and international tourism bodies have consistently been calling for a change in the banding of the UK’s APD to make it a more reasonable system for long-haul destinations. An additional increase in APD would have a particularly significant effect on air travel to South Africa and Cape Town: Long-haul destinations are unambiguously targeted by APD. The UK is Cape Town’s primary inbound source market, and British travellers (who are still battling the after-effects of the recession) are likely to experience an increase in air taxes as an added strain.

Travellers to and from the UK have seen three APD increases since 2007, and UK aviation tax is up to 8.5 times more than the European average. The British government has been severely criticised about what many regard as disproportionate air taxes. APD has united the travel industry in an unprecedented fashion: International and UK tourism organisations, airlines, airports, tour operators and environmental groups have all expressed their deep concern about the tax to the UK government, arguing that it will be damaging for travel, tourism, business, the economy and the environment.

APD has increased by 2 600% since it was first introduced in 1994. This year, £2.2-billion of holidaymakers’ and business travellers’ money will pour into the Her Majesty’s Treasury coffers and the UK government has stated that it intends to raise the tax by a further £1.4-billion by 2015. Pricing continues to be high on the agenda in Cape Town Tourism’s discussions with international trade partners when marketing Cape Town. Pricing, and perception of pricing, were concerns raised with fervour prior to the World Cup, with authorities urging the Cape Town tourism industry to maintain responsible pricing in order to uphold and reinforce our value-for-money position.

It is my prediction that international tourism uncertainty will remain the norm. In Cape Town, we have seen the trajectory of tourism from the assurance of a golden period of plentiful demand and lesser supply to the palpability of abundant, world-class supply and shrinking, competitively driven, financially constrained demand.

Ever-increasing airport and passenger taxes add to the perception that Cape Town has become an expensive destination to visit. Even though Cape Town Tourism has added its voice to the call for fairer airline taxes, we realise that policy decisions like international taxation is beyond our control.

We should therefore be more diligent in our marketing and product packaging strategies. I believe that we must offer a clearer vision of what we are marketing overseas, what a traveller can expect, and emphasise that one can experience the ultimate in luxury (at the price that it comes at) or the best in budget accommodation, all in one inspirational destination: Cape Town. Value for money is the order of the day, whether on a large or small scale. Learning to package our destination in a more competitive, diverse and creative way – that offers the visitor incredible, once-in-a-lifetime experiences and added value – has to be our focus in a world where tourism and travel have changed irreversibly.

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