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Senior Airline Official Says Taxes Pose Problems For Aviation Industry

By Nicole Best
CMC Correspondent 

WILLEMSTAD, Curacao (CMC) – The chief executive officer of the US-based Jet Blue airline, Robin Hayes, says high taxes are posing a major challenge to airlines servicing the Caribbean.

“We know if the tax can come down by US$50 dollars , we could stimulate a high number of travelers to the region. We would add the capacity, (and) the overall tax take would go up because more people are coming, they’re staying longer,” Hayes told the State of the Industry Conference (SOTIC 2015) here, organized by the Barbados-based Caribbean Tourism Organization (CTO).

Robin Hayes

Robin Hayes

Hayes, whose airline started flying to the region in 2011, said there is need for Caribbean governments to revisit their taxation policies for airlines, in order to increase the number of visitors to the region.

“I think the governments and the communities we have the most success with, are the ones that really understand that.”

But, the Premier of the Turks and Caicos Islands, Rufus Ewing, said aviation taxes can only be lowered in Caribbean islands if the problems of infrastructural development and national security are solved.

“Most of our countries have revenue structures that are based on taxes…If you really want to remove those taxes, then we need to look at how we’re going to put in place alternative revenue streams.”

Ewing told a panel of government and industry officials that if they really wanted to have the taxes removed from airline tickets, they must come up with a sustainable alternative for revenue generation.

“Many of the countries in the region have to develop new infrastructure at airports and seaports. Both of these infrastructure are coming with private and public partnerships and within those partnerships, revenue are predicated based on taxes such as airport tax, departure tax, that are levied to be able to pay for those infrastructure.

“So how do we pay for critical infrastructure if we can’t levy those taxes. Solve those problems and we would find that we would be able to move forward with these particular initiatives in making the Caribbean more accessible.”

CTO chairman and Barbados’ Tourism Minister Richard Sealy said that regional governments should get together to discuss the issue.

“The idea is that we can collectively look, as leaders and ministers of finance, and ask them to relook the tax argument because we want tax to be on the outputs. It isn’t to say we take taxes off the airline and now place them on the hotels because the hoteliers also have their own challenges with taxation.

“But we do need government revenue to run countries and I think we have to look at both sides of the argument.”

JetBlue flies to 28 eight Caribbean destinations and Hayes said there are plans to increase the number of flights and destinations within the year.

The airline said it would increase flights to Barbados by April next year and the airline’s CEO said the company would begin daily round-trip flights between Fort Lauderdale in Florida and Barbados.

Hayes said Barbados is a terrific example of a destination where the airline has true partnerships with the ministry, the hoteliers and the airport.

“I think one of the reason why we are so excited about having service to Barbados is the very strategic way the government of Barbados has always looked at this issue; and they understand that by keeping taxes relatively low to the rest of the region, it would allow airlines like JetBlue to stimulate the market and add additional service.”

Hayes said his company will begin flights to Antigua early next month and will also increase flights to Haiti.

However, he warned that there is need to focus on sustainability of the region’s natural resources, adding that there is value in maintaining a pristine environment.

“By attaching actual dollar values to unspoiled shorelines, we are creating the business case for communities to better protect the eco-systems we depend on and to promote the economics of shoreline conservation.

“There appears to be a strong correlation with what the tourism industry considers the obvious – the nicer the beach, the nicer the hotel, the more expensive the airline ticket may be.  Nothing spurs governments or businesses to act more, like hard data,” Hayes told the tourism and government officials.

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