The revised APD, which will be implemented in two stages from November 2009 and November 2010, will comprise a four-tier banding system, based on the distance between London and the destination country’s capital city.
It means flights to Hawaii or California will be less heavily taxed than those to the Caribbean, which will see APD rise by as much as 94% by the end of next year.
Jean-Claude Baumgarten, WTTC president and chief executive, said: ‘Clearly, this will have a very damaging effect on demand at a time when demand is already very sluggish due to the recession and factors such as the H1N1 influenza virus.’
He added that the revised APD would reduce UK spending in emerging markets, thereby undermining the Government's support of the Millennium Development Goals, aimed at alleviating poverty and generating employment in such countries.
‘The APD acts as a distortion to free trade,’ he explained, ‘and this will ultimately work against the Millennium Development Goals by crippling regions most in need of travel and tourism to run and support their economies.
‘Take the example of the Caribbean. UK spending on tourism in the region totalled £1.45bn in 2008 – a significant contribution to these island nations, for which the travel and tourism economy contributes 14.5% of total GDP.’
Baumgarten also said that of equal concern was the fact that APD was billed as an environmental tax, but none of the money collected to date has been ploughed back into the environment.
Furthermore, the increased APD might actually result in higher aviation emissions, he claimed, as passengers travelling long-haul from the UK choose to connect via airports in continental Europe to lower the rate of tax that they have to pay.
‘This would likely increase short-haul flights out of the UK, and so end up increasing, rather than decreasing, carbon emissions,’ he said.
As a result, the WTTC believes ‘the overall APD system should be scrapped’.
The WTTC is a global forum for business leaders in the travel and tourism industry, with members including the chairs and chief executives of the foremost 100 companies in the sector worldwide.
See also:
PSA backs ABTA's APD campaign (22/07/2009)
ETOA wades into APD debate (09/07/2009)
APD fury of Caribbean specialists (02/07/2009)
APD hike threatens jobs and economy (25/06/2009)