Regional governments urged to substantially cut taxes on air travel
NEW YORK, Jun 6, CMC – The chief executive officer of Inter-Caribbean Airways, Trevor Saddler, says Caribbean governments could play a much more meaningful role in inter-regional travel by significantly reducing the taxes on air travel.
“Governments can if they wish engage in increasing frequency of air travel by cutting substantially taxation on regional travel. It is supporting the people of your country which is the good reason for you to want to do this,” Saddler said, as the Caribbean Tourism Organisation (CTO) organised Caribbean Week continued here on Tuesday.
The three-day event which ends on Wednesday, include discussions on critical issues shaping the direction and growth of Caribbean tourism and the funds raised during the week will contribute to scholarships and grants for Caribbean students in the region and the Diaspora.
Commuters across the Caribbean have been complaining about the high cost of intra-regional travel even before the demise of the Antigua-based regional airline, LIAT that serviced many Caribbean destinations.
The major shareholders of the Antigua-based airline, which entered into administration in July 2020 following increased debt and the impact of the coronavirus (COVID-19) pandemic, are Antigua and Barbuda, Barbados, Dominica and St. Vincent and the Grenadines.
In an interview with the Barbados-based Caribbean Broadcasting Union (CBU), Saddler said as his airline has grown across the Caribbean, his presence here is part of the engagement with the various stakeholders of the tourism industry in the region.
“So even though this is an event hosted in New York, the reality is a large percentage of the source market coming out of this area picks up our flights, makes connections. Not everyone flies to a non-stop (destination)…so it is important that we raise our visibility as far as we can”.
Saddler said he believes his airline is filling the void created by the demise of LIAT, noting that it has set up a base in Barbados with five airplanes and that another of its ATR’s would be based there shortly.
“What we are doing is upgrading the capacity of our fleet…so that there are 60 per cent more seats on any one flight. We have just increased our schedule out of Barbados in March with roughly 100 per cent more seats and the next step in the journey is increasing destinations across the region.”
Saddler said when his airline became operations 10 years ago, the emphasis was on how “we could move the people of the region around the region and the consequence of that is regional travel began to emerge because there was a choice to go somewhere”.
But he acknowledged that the high airfares are taking a toll on the sector.
“The traveller sees one number and that’s how much I pay. In some cases it is as much as half of what you pay is going to governments. So if I could compare a journey in the United States where I could drive and take a bus, a train, so I could get around and the taxes between both ends…might amount to US$25 or US$30..
“Whereas within the Caribbean we don’t have roads that can get you from one island to another, so if you are going to travel it is mostly by air. So air is an essential service, it is not a luxury, it is an essential service for the people to move around.
“The consequences of folks in the region wanting to travel is that it dampens the demand because it is as if I am paying for two tickets,” he said, noting that the lowest airfare between Antigua and Barbados is US$113 dollars, but taxes were US$133.
He said the airline receives the airfare and from that “we pay everything. We pay to collect the taxes, we pay credit card fees on that and we pay to have to remit this to governments on either end of the journeys.
“Taxing the people in the region is a high cost for us to do the job, a high cost for the traveller and the reality is if that person could see a reduction in those taxes…my air fare can’t go down because I still have all of the expenses …which I must pay for including air traffic control fees,…sometimes outrageous in some of the markets we serve.”
Saddler said taxation is the “bigger piece” of the travel fares, noting that comparisons being made between airlines making shorter flights than those going trans Atlantic for example, are not providing the true picture.
“My unit seat cost is going to be higher just because I fly shorter flights, so I get the costs on either end quickly arise (and) not spread over three four hours. So cost is a reality I can’t compete with the 737…so it is having the right aeroplane for the mission …”
But he said despite these concerns, Inter-Caribbean Airways fells “very bullish …what we have done is build connectivity.
“The connectivity is not about everybody having a non-stop flight between any two markets. “The market cannot support it. But what we have done is to make sure the schedule is every efficient,” he added.
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