How Passenger Taxes Are Hurting Caribbean Aviation

By By Cdr. Bud Slabbaert
Op-Ed Contributor

What the Caribbean needs is so simple: rapid, reliable mobility at reasonable rates. What makes it so difficult? It is almost as short and simple to explain.

There are two players; the aviation industry and the governments. The aviation industry is not really the problem. They have the equipment and the crews.  They have fixed costs and calculate what is needed to make a profit.  One could argue about how cost-effective they are and what is considered a reasonable profit margin. And that’s it. Yet, one should also consider the entrepreneurial risks they are taking.

On the other side, you have the governments. For one, they have no risks in the aviation operation. Yet, they want a random tax contribution per passenger; no particular calculation. Mind that landing fees are different than taxes, and they do have a particular justification. So, what justifies the passenger tax? Inter-island or international, it doesn’t make a difference. Related to tourism, a British journal once called it “A tax on all your dreams”.

Major airlines are polite to governments. They listen politely when an authority is courting or flirting and trying to convince them to come on over. However, the operators don’t tell governments where to go; they just don’t put the destination on their schedule.

Except for one airline, or rather one airline boss, who is known for telling anyone where to go, or in clear text expressing ‘that they can shove it’. Ryanair decided in October last year that it would drop 16 routes and 600 jobs after an Italian government’s tax hike. It would also result in 800,000 client losses according to their calculations. Their explanation: “Ryanair had no choice but to close two of its 15 Italian bases, and move its aircraft, pilots and crews to countries that have lower tourism costs. The tax increase will seriously damage Italian tourism, and it would hand a golden opportunity for growth to destinations in Spain, Portugal and Greece that have lower tourism costs.”

Governments love Low Cost Carriers because they lure tourists with low fares. Exactly for that reason, they believe that the LCC will bring the oh-so desired passengers by the masses. Yet, then they slam the air passenger duty on top of the fares, to the extent that those are nearly double. Does that make sense? So, before the passengers don’t show up and seats remain empty, the airline doesn’t open a route or terminates it. That does make entrepreneurial sense!

“Once you have tasted flight, you will forever walk the Earth with your eyes turned skyward, for there you have been, and there you will always long to return,” according to a quote attributed to Leonardo da Vinci. Anyone who is less than a genius may tell you that when the taste of flight fare turns from sweet to bitter, he will not turn his eyes skyward in all directions anymore.

Governments can argue until they turn blue or green why a passenger tax is needed or why they believe it is justified. They may even feel proud and protzy when they believe that they won the argument.

However, the tourists have the last word in determining what price is acceptable in their vacation budget, for which that had to work and save a whole year, to make their dream retreat come true. Taxes are not a dream incentive; they are a repellent.

For tourists, there are plenty of options near and far in the geography, where the temperatures are warm, the platinum beaches are lined with palm trees, and where they are received with open arms. Governments can try to have it their way; but tourists for sure will find it their way…., somewhere else.

Cdr. Bud Slabbaert is the organizer of the annual Caribbean Aviation Meetup.