The British Government is being urged to use the upcoming autumn financial statement to remove Advanced Passenger Duty (APD) altogether in a bid to ensure the UK remains attractive in a post Brexit world. Airlines UK and the Board of Airline Representatives (BARUK) in the UK have teamed up to appeal to Chancellor Philip Hammond. Airlines UK is the trade body for UK registered airlines which currently has 11 members, including British Airways, Virgin Atlantic, Thomas Cook and Thomson, all of which serve Barbados.
According to their website their objective is to ‘work with governments, regulators and legislators to promote the interests of UK airlines and with organisations across the sector to encourage long-term sustainable growth in aviation’. After a prolonged period of relatively low fuel prices the continuing crises in the Middle East is now forcing crude oil costs up. This combined with the Sterling currency fluctuation caused by the uncertainty of a Europe without the United Kingdom and the resulting near 20 per cent fall in value, when compared with the US$.
Most airlines buy forward to combat the increase in the cost of fuel, but the double whammy of a depleted value of sterling and the hike in Jet A1 fuel prices, which have to be paid for in US Dollars, have combined to create an almost ‘perfect storm’ in the UK airline industry.
Not surprisingly the airlines are looking from every possible viewpoint what could influence keeping fares down because they know higher seat costs will result in less people travelling.
The other unknown is the dreaded ‘I’ word, inflation. In 2015 the UK was rated as the world’s 9th largest exporter. Good news you would think, with a lower value of Sterling making British goods and services more attractive and less expensive. But the UK is the 6th largest importer, resulting in virtually all those products becoming at least 20 per cent more expensive.
In March 2017 the British Government will change the way it measures inflation, to include home owning costs. This will inevitably increase the rate of inflation, resulting in the Brits having reduced disposable income or in our interests, less to spend on foreign holidays.
From our perspective, there are a few positives on the horizon. Virgin have recently changed their frequent flyer or loyalty programme making it easier and quicker to earn sufficient miles to fly ‘for free’. In realty of course, when you pay the taxes and other add-ons to miles tickets, there is still a substantial cost, but it is at a lower price option than a full fare ticket or another way to upgrade your seat preference.
Sadly, our marketing gurus rarely consider frequent flyers in the overall promotional picture, despite some experts calculating that one in ten of our total visitors, use miles to reach us.
What cannot be disputed is that the majority of business people amass their miles to use on leisure travel and once again I call for a dramatically re-designed airport landing form which includes the question, ‘did you use your frequent flyer miles to reach us’?