18th September 2022

IATA warns Caribbean risk pricing itself out of global travel market

By CMC

GEORGE TOWN, Cayman Islands (CMC) — The International Air Transport Association — IATA –Wednesday warned Caribbean destinations that they are “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 Caribbean Aviation Day conference here 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.

He told the conference that the World Travel and Tourism Council — WTTC — forecasts a possible annual 6.7% travel and tourism GDP increase between 2022 and 2023 if the right policies are implemented.

Cerdá said that as the world emerges from the coronavirus (COVID-19) pandemic, the good news is that people want to travel and this is made very clear by the ongoing recovery.

“Global passenger air traffic has reached 74.6% of pre-crisis levels,” Cerdá told the event, which is being held under the theme “Recover, Reconnect, Revive”.

To illustrate his point, Cerdá said that in some Caribbean destinations, if passengers are not arriving during “regular” local business hours, airlines are being charged significant overtime fees for each passenger to be processed by immigration and customs.

“Aviation is not a 9 to 5 business. Global connectivity is around the clock. This process is simply unacceptable and makes no sense as those very same passengers are the ones staying at local hotels, eating at local restaurants, and fuelling local economies, no matter what time they arrive. So why penalise and charge airlines extra who transport these passengers?” Cerdá said.

“Why not change the mindset and adjust customs staffing levels accordingly and attract more airlines to the market?”

He said that the taxes and fees added to airline tickets substantially increase the cost of air travel to and from the region.

“By way of comparison, at a global level taxes and charges make up approximately 15% of the ticket price and in the Caribbean the average is double this at approximately 30% of the ticket price,” Cerdá said, adding that in some markets, taxes, fees and charges make up half of the total ticket price.

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.

“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,” he said.

The IATA vice president said that a flight for an eight day vacation from London to Bridgetown in October is around US$800. However, a flight from London to Dubai for the same time frame is US$600.

“For a family of four, that is a $800 difference just for the flights,” he said, noting that from Miami to Antigua, it costs around US$900 for a round trip ticket for the same dates in October but from Miami to Cancun averages around $310 for a round trip ticket.

“Again, for a family of four, that is a total difference of over $2,000 just for the flights,” Cerda said.

He said that air travel demand is close to reaching pre-pandemic levels “but to support a sustainable aviation sector as an integral part of the tourism value chain we need governments to cooperate amongst themselves and with the industry”.

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