Head in the clouds
A planned increase in flight levies,
which rise the further a passenger is flying to help offset carbon emissions,
could have a catastrophic effect on far-flung tourist markets...
Come fly with me, come fly, come fly away... But make sure you've got your wallet at the ready. With long haul flights already setting Brits back more than £1000, this planned new air travel tax boots will add insult to injury.
The increase would come under changes to Air Passenger Duty (APD) flight taxes, imposed to penalise travelers who use most environmentally-damaging fossil fuels.
The new Prime Minister of New Zealand, John Key, has met with British Prime Minister Gordon Brown to try and stop the tax, which the New Zealand travel industry has said could jeopardise the billion-dollar tourist market.
APD is currently levied at about £11 on economy flights within Europe and £40 beyond, with premium seats taxed at double those rates.
Under the changes, charges will be levied across four bands from November 2009.
Band A covers Europe, band B extends to destinations such as Egypt, Bahrain and the United States, band C takes in the Caribbean, and band D includes Australia and New Zealand.
Total APD on a band D flight will be £55 from next November and £85 a year later.
The further a passenger is flying, the higher the tax will be, in a bid to cancel out the carbon footprint of the long flight. Thus, the air miles racked up when flying from the UK to far flung destinations such as Australia and New Zealand will incur the highest of four levels of the tax.
The tax will not only affect people from the UK traveling to New Zealand; it will also impact New Zealanders heading over to the UK, who will be forced to pay it on their return flight. About 94,000 New Zealanders went on short-term trips to the United Kingdom in the past year.
As a large part of the New Zealand economy is reliant on tourism, and the UK is the country's second biggest tourism market, with about 290,000 visitors in the past year, this tax could have a devastating impact on the economy.
John Key is also Tourism Minister, and there are concerns any disincentives against visiting New Zealand will worsen a drop in visitor numbers already caused by the global recession. Tourist numbers have already dropped by four per cent from last year.
He is also raising questions about how rational British plans to more than double the tax to fly to Australasia are.
Mr Key said, "I put our case on the table and indicated to Gordon Brown that it would be of significant concern to New Zealand, what with the substantial numbers of British tourists coming to New Zealand and the fact that Britain is such a large market for us."
New Zealand Tourism Association Chief Executive Tim Cossar said that the British tourism market added about £335 million a year to the New Zealand economy, and any impact on that - even of just a few per cent - could be worth many millions of dollars.
The tax will more than double within two years - rising from the current £40 to £55 in a year and increasing again to £85 in November 2010.
Mr Cossar added, "It certainly could have an impact on price in what is considered a reasonably expensive ticket anyway.
"Traveling to the other side of the world isn't cheap, so it's just another thing that could go against us," he said.
John Key is also worried that this may start a damaging trend and other countries may start to impose environment taxes on flights to New Zealand too.
He also questioned how the tax would work in practice, for instance when passengers had stopovers.
Picture by wikipedia
