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19 March 2012

Air Passenger Duty Tax on international tourist departures is unfair

Statement by South African Tourism CEO, Mr Thulani Nzima

APD taxes will have a long-term effect on international travel.

South African Tourism supports the global call for a review of the exorbitant Air Passenger Duty (APD) taxes imposed on international tourist flows by the United Kingdom. Thulani Nzima, CEO South African Tourism

South African Tourism supports the global call for a review of the exorbitant Air Passenger Duty (APD) taxes imposed on international tourist flows by the United Kingdom. These unilateral taxes have a detrimental effect on international travel at a time when the world tourism industry is recovering from the global economic crisis.

Initially introduced as a ‘green’ tax by the United Kingdom, this tax is now clearly aimed at revenue–generation. These taxes, when combined with the European Union (EU) Emissions Trading System (ETS), are leading to double taxation and are distorting markets. Its impact is particularly severe on long-haul destinations where there are no alternative means of travel, unlike short-haul destinations in Europe for instance, who can still rely on travel by ferry, car or rail.

These taxes, which add hundreds of rands to the cost of tourists visiting destinations such as South Africa, is having a seriously adverse effect at a time when destinations are straining to defend and maintain tourist arrivals from traditional markets like Europe. The United Kingdom is South Africa’s top tourism source market, with 453 030 tourist arrivals recorded in 2010. Should each tourist pay an APD tax of £85 (economy class; increases to £170 for business class) per trip; that amounts to a conservatively estimated additional cost of £38 million (or over South African R 462 million) per year for travel by UK visitors to South Africa. Given the price sensitivity of tourists under current economic conditions in Europe, this is bound to affect long haul destinations like South Africa.

Depending on the price elasticity of demand (InterVista puts the price elasticity on the UK-SA route at -1.05), the UK APD tax increase alone between 2009 and 2010 could be impacting traffic on this route by 3.8%, which translates into a loss or forfeited growth of just under 20 000 UK visitors to SA per annum.

Ultimately, these excessive, unilateral and discriminatory taxes severely affect the tourism potential of long haul developing country destinations and threaten the livelihoods of thousands of employees in the global tourism industry.

SA Tourism would like to put it on record that we support all initiatives to reduce carbon emission as long as the process is consultative and transparent.

Ends.

For further information contact

Jermaine Craig, South African Tourism

Tel: 011 895 3000

Mobile: 083 201 0121

jermaine@southafrica.net

Allison MacDonald, Ireland/Davenport

Tel: 011 243 1300

Mobile: 082 771 2541

Allison.macdonald@ireland-davenport.co.za

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South African Tourism is the national tourism agency responsible for the marketing of South Africa as a preferred tourist destination. It is headed up by Chief Executive Officer, Mr Thulani Nzima, Chief Operating Officer, Mr Timothy Scholtz and Chief Marketing Officer, Ms Roshene Singh