Page last updated at 23:01 GMT, Friday, 1 October 2010 00:01 UK

The air travel taxes influencing how far we fly

By Fiona Foster
Presenter, Fast Track

Plane after take off
Airlines are offering cheaper flights than before but travel taxes are soaring

In recent years, travel and tourism taxes have spread across the world like bubonic plague - and are proving just as popular.

Holidaymakers, airlines and tourism organisations have grown increasingly concerned as established taxes have risen and even more have been introduced.

For many, their annual vacation abroad is a cherished tradition but it is feared that onerous taxes mean certain holidays will no longer add up for a budget-conscious family.

EUROPEAN TRAVEL TAXES
1994 Air Passenger Duty (APD) introduced in the UK
2008 Dutch Air Passenger Tax introduced. Belgium drops plans to tax passengers
2009 The Netherlands scrap Air Passenger Tax. Ireland introduces an airport tax
2010 UK raises APD in November
2011 Germany to introduce tax on air travel from January

In Britain, Air Passenger Duty (APD), which everyone flying out of a British airport must pay, will increase on 1 November 2010.

The further you fly, the more you pay - so if a family of four from Australia visited Britain or vice versa they would pay out around $537 (£340) in APD before they have even got on the plane.

And that is in economy class - travelling in business would cost them more than $1,000 (£633).

Critics say it may be enough to put some people off making the trip.

"Under the rise in APD, the average family of four travelling from the UK to Orlando will pay $400 (£253) per family. That is bound to make consumers think again about travelling," said Greg Dawson of Virgin Airlines.

Competition fears

In 2009, the Netherlands followed Belgium in abandoning its equivalent to APD because although it raised $420m (£266m) in one year, the Dutch reckoned the loss to the wider economy as a result of the tax was over $1.5bn (£950m).

"The airports didn't like it, the airlines didn't like it and tourists didn't like it - they were very quick to go over to Belgium or Germany and jump on a budget airline for half the price and go off on holiday - so abolishing it was a win-win for everyone," explained Robin Pascoe, editor of Dutchnews.nl.

But while Germany benefited from the Netherlands' brief flirtation with an air passenger tax, the clog will soon be on the other foot.

In August, the German government approved its own air travel levy, to be introduced on 1 January 2011. It ranges from $10 (£6) per passenger for short trips to $60 (£38) for long-haul.

German airlines fear their competitors in the Netherlands, Belgium, Poland and Switzerland will mop up passengers keen to avoid the new tax.

Air Berlin said it would continue to fight the charges, calling them "a stimulus programme benefiting foreign airline companies".

'Unfair' system

The German levy is being promoted as a green tax aimed at discouraging people from flying, just as Britain's APD was at one time.

But critics including Germany's Green Party say the fact that these taxes are higher on long-haul flights means the "we are trying to change aviation habits" argument simply does not stand up.

"With short-haul flights customers do have an option," explained Mr Dawson. "They can get the Eurostar, then can use rail, they can drive. There is an option to change the mode of transport.

"But if you are visiting your family in the Caribbean, what other options do you have?"

Caribbean beach
Caribbean tourism leaders say travel taxes have led to a decline in visitors

Some critics would prefer to see a tax per plane rather than per passenger - something the British government says it is exploring.

But as things stand, opponents insist the system is unfair on the ordinary passenger.

"There's always been a very strange anomaly about Air Passenger Duty when governments say it is a green tax," said Sean Tipton from the Association of British Travel Agents.

"If you own a private Learjet you don't have to pay any tax at all. Companies bringing in air freight don't have to pay tax.

"If APD was replaced with a per plane duty then that would change. Very rich people with private jets, they'd have to pay tax and so would cargo planes and we think that's a fairer way of doing this."

Visitor decline

So if holidaymakers are rethinking their plans to sidestep these taxes in cash-strapped times, where does that leave destinations that are economically reliant on long-haul visitors? In short - very unhappy.

"If you put a departure tax up which holds back travel, you penalise your own suppliers and you penalise the poor countries who have an export called tourism," explained Geoffrey Lipman from the UN World Tourism Organisation.

"They produce it at home and they sell it in the international market place. The departure tax hits at their exports."

Statue of Liberty
The Esta form applies to all 35 countries with US "visa waiver" status

Tourism leaders in long-haul Caribbean destinations believe that even before November's increase, Air Passenger Duty has contributed to a decline in British visitors of up to 25% on some islands.

Carol Hay of the Caribbean Tourism Organisation said: "We are in a price-driven market right now and if you have, for example, a family of four seeking to travel, the price is going to be important to them.

"And if they see that travelling to the Caribbean is going to cost a few hundred pounds more than travelling to another region then it may mean that it will influence their choice."

But other costs are mounting too. In an effort to raise funds for a nationwide tourism body, the US has started charging $14 (£8.90) to enter the States under its Electronic System for Travel Authorisation (ESTA).

This will add $56 (£35) to a family of four's trip to America - possibly not enough in itself to put many people off going. But some say that like all these tourism and travel taxes, it sends out the wrong message from an industry which is already suffering as people cut back.

"The whole point of the programme doesn't make a lot of sense when you say 'please come visit our country but we're going to charge you at the door'," said Steven Lott of IATA.

"It's like going to your friend and saying it would be great if you could come over for dinner tonight but you're going to have to pay $20 to get into my house."

It is likely these new taxes will continue to face strong condemnation from those in the industry.

Unless they are overturned, they will be the tipping point for some, who are already altering their travel plans to try and avoid the worst of them.



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