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IATA warns Jamaican airports against doubling tariff

Published:Wednesday | September 17, 2014 | 9:00 AM

Proposed increase would threaten visitor arrivals, jobs

Janet Silvera, Senior Gleaner Writer

St Thomas, US Virgin Islands: The International Air Transport Association (IATA) is urging regulators of the airline industry to act strongly and swiftly against proposed "big increases" in aviation fees by Jamaica's two main international airports, Sangster and Norman Manley.

Both airports have proposed tariff increases of more than 100 per cent, as of January 2015, to attain a return of capital of around 20 per cent a year in US dollars.

As early as this July, airlines operating at both airports were advised of the impending increases.

In a keynote address yesterday on Aviation Day in St Thomas, US Virgin Islands (USVI), IATA's regional vice-president, Peter Cerda, said measures such as these do not encourage or support the development of the tourist industry in the region.

"Governments have to foster positive business environments through consultation with the industry and transparency in order to ensure win-win situations for all," said Cerda, pointing to the issue of taxes and charges in the region, which he says transcends the formal breaches of global standards and recommended practices.

"The simple truth is that this region is a very expensive place for airlines to do business."

REDUCING COMPETITIVENESS

Admitting the issue was a global one, Cerda said it seems to be particularly acute in the Caribbean.

"Aviation taxes increase the cost of travelling to the Caribbean and make the islands less competitive relative to other destinations," he said, warning that taking the islands as a whole, each US dollar of ticket tax could lead to more than 40,000 fewer foreign passengers, US$20 million of reduced tourist expenditure, and 1,200 fewer jobs.

According to the aviation executive, fuel charges in the region were about 14 per cent higher than the world average.

"Typically, fuel represents about a third of an airline's operating costs," he argued, highlighting the Dominican Republic and The Bahamas as two countries guilty of implementing high rates.

"Tax on international jet fuel still remains high at 6.5% in the Dominican Republic, even when the price is reduced, while The Bahamas has applied a 7% import duty on jet fuel."

Cerda's comments come on the heels of the Caribbean Tourism Organisation's State of the Tourist Industry Conference (SOTIC), which officially opens today at the Marriott Frenchman's Reef and Morning Star Beach Resort in the US Caribbean territory.

SOTIC, organised in collaboration with the USVI Department of Tourism, will bring together speakers of international and regional acclaim from various fields linked to tourism to provide best practices and winning strategies on a wide range of issues that impact the region's primary money-earner - tourism.

janet.silvera@gleanerjm.com