Cummins defends high taxes on travel into Barbados
George Town – Minister of Tourism and International Transport, Senator Lisa Cummins expressed concern on Wednesday that 56 per cent of the cost of an airline ticket to Barbados was made up of taxes.
But, Cummins said, Barbados has an airport service charge that goes towards marketing the destination internationally as she sought to explain the reason for the high taxes on travel into the island.
“But 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,” she told a panel discussing “Multi-Destination Tourism” as part of the Caribbean Aviation Day conference in the Cayman Islands.
“That helps to support the airlines where we have incentive programmes and cooperative marketing programmes in the source markets.”
The minister said there was a terminal fee that supports the infrastructure of the aerodrome, noting that the country recently completed a multimillion-dollar renovation of the runway at the Grantley Adams International Airport “because it needed to be up to international standards”.
“So, when you disaggregate where the charges go, they’re not going to profitability for the destination,” she said. “They’re not going to our Consolidated Fund as a source of revenue. They’re going back into providing the kinds of infrastructure and services that benefit the aviation industry.”
Cummins was speaking after the International Air Transport Association (IATA) warned Caribbean destinations that they were “running the risk of pricing themselves out of the global travel and tourism market, where passengers have more choice than ever before”.
IATA Vice President for the Americas, Peter Cerdá told the conference that the region “needs to remain an attractive tourist destination”, adding that often it is difficult to see the correlation between aviation fees and the service provided.
Cedar said at a global level taxes and charges made up approximately 15 per cent of the ticket price, but the average was double in the Caribbean at approximately 30 per cent.
He said that for flights from Barbados to Barbuda, taxes and fees represent 56% of the ticket price, and 42% from Bahamas to Jamaica, the same as from St. Lucia to Trinidad and Tobago.
To fly from Port of Spain to Barbados, taxes and fees account for 40% of the ticket prices.
“In comparison, Lima, Peru, to Cancun, Mexico, another beach destination, taxes and fees only represent 23%,” Cerdá said.
Cummins said that “perhaps” the taxes could be reduced.
“Will they be reduced?” she asked. “That’s possible too, but at the same time, the other side of that is that what Barbados has experienced is that there has to be a balance between asking your destination to remove those charges and to reduce those charges that then contribute to the profitability margins of the private sector carriers, which will be the airlines.
“So how do we find that balance between ensuring that airlines are profitable, and they are also able to benefit from the best support mechanisms that are being provided by the destinations?”
The minister said Barbados had a responsibility not just for its own domestic travel requirements in terms of international connectivity, but also connectivity within the region.
“So, we have to make sure that our neighbours and our sisters and brothers have the opportunity to be able to move freely and that very much is a challenge,” she said.
Cummins said Bridgetown wanted to see the connectivity proposed by economist Marla Dukharan, in which an airline leaves Suriname and travels through the region, with passengers arriving in the western Caribbean by the end of the day.
“We would love to be able to see that level of connectivity, and in the 2020 period, for example, when we aggregated what number of seats we are now missing,” she said. “We also started in the course of the last few weeks to look at what those numbers look like.
“And 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 to support the kinds of things that I just mentioned. We don’t have the number of seats that compensates for those losses in revenue by ensuring that they’re filled by volume or consumer spend on island to supplement it in the domestic economy.”
The minister agreed with a position articulated by the President of the Caribbean Development Bank (CDB), Dr Gene Leon, who said in an earlier discussion, “it is a complex mix … there’s no singularity about it.”
Cummins said: “And so the tourism sector, as said earlier, as well, it’s so complicated when you start to disaggregate it into the wider economy that you really do have to understand that you can’t treat to a single slice of the pie without understanding how it is going to affect other parts of that entire pie in the pan.”