IATA issues travel cost warning to the Caribbean

23rd September 2022

The International Air Transport Association (IATA) has warned Caribbean countries that they are pricing themselves out of the global tourism market.

The caution came at the recent Caribbean Aviation Day in the  Cayman Islands on 14 September. Staged under the theme ‘recover, reconnect, revive,’ the event saw government ministers, industry experts, and senior aviation executives come together to discuss key challenges impacting the region and opportunities for growth.

With global passenger air traffic now at 74.6% of pre-COVID levels, IATA Vice President for the Americas, Peter Cerdá stressed that Caribbean destinations are “running the risk of pricing themselves out of the global travel and tourism market, where passengers have more choice than ever before”.

“A recurring theme is also taxes and charges levied on aviation. Yes, we understand that the provision of adequate infrastructure for aviation comes at a cost, but very often it is difficult to see the correlation between the level of costs and charges, and the actual service provided,” said Cerdá.

He highlighted that while globally taxes and charges make up approximately 15% of the ticket price, in the Caribbean this constitutes 30% of the price on average, with some destinations reaching as high as 50% of the total ticket cost. When compared to destinations like Lima, Peru, Cancun, Mexico, add other relatively close beach destinations whose taxes and fees only represent 23%, the Caribbean is becoming a less attractive destination.

“Today’s passengers have a choice, and as the total cost of vacations increasingly becomes a decision-making factor, governments must be prudent and not price themselves out of the market,” urged Cedá, noting that t the World Travel and Tourism Council (WTTC) forecasted a possible annual 6.7% travel and tourism GDP increase between 2022 and 2023 if the right policies are implemented.

Speaking later at the conference, Barbados’ Tourism Minister Lisa Cummins defended the taxes and charges to her country. “Let us break down where fees and charges go to in-country because the things that we want and the things that we have to be able to provide come with a price tag,” said Cummins. She argued that taxes and charges do not go to the government’s consolidated fund as revenue, but instead go back into providing infrastructure and services in the aviation industry.

“We realised that even if Barbados would, and we have been looking at it, look at the changes that we potentially can make to our tax structure… We don’t have the number of seats that compensates for those losses in revenue,” said Cummins about the trade-off between government revenue and taxes.

During the session entitled ‘Transforming Regional Connectivity: The Role of the Private Sector in Financing Intra-Regional Travel,’ President of the Caribbean Development Bank (CDB), Hyginus Leon acknowledged the complexity of the relationship between taxes and the tourism industry.

Leon highlighted the need for investment in operational aspects of the travel industry in the region including appropriate financing mechanisms which would accommodate the cycles of the aviation industry, and the establishment of an enabling environment with the requisite multilateral agreements effected by the countries in the region.

Meanwhile, Anguilla’s Minister of Tourism Haydn Hughes echoed the importance of aviation given that his island assigns a low priority to cruise tourism. “You have to weigh what you would benefit out of a cruise and what will be the drawbacks,” he said, adding that the island has decided over decades that cruise tourism is not good for the destination because of the low average spend of cruise passengers.

“We have a 20-year plan in terms of aviation and aerodrome development and that plan has already started,” said Hughes referring to the extension of the runway and a new terminal building on which construction is expected to start in early 2023.

The conference also saw the election of a new chairman of the Barbados-based Caribbean Tourism Organisation (CTO). Cayman Islands Minister of Tourism, Kenneth Bryan replaces Barbados’ Lisa Cummins for a two-year term.  

“I’m ready to take on the challenge, in collaboration with my regional colleagues, of finding a new way forward, as well as addressing any issues we have within the organisation to improve efficiency and focus,” said Bryan at the CTO’s general meeting held along with the conference.

The CTO membership includes two dozen countries and territories across the region, as well as private sector entities as allied members. Cayman Islands Director of Tourism Rosa Harris was also elected as chair of the CTO Board of Directors.

Photo by yousef alfuhigi

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