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Air Passenger Duty Risks Keeping People Away From The Olympics

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Today marks 100 days until the start of the Olympics. While it seems likely the number of tourists coming to London will enjoy an upturn in 2012, there are emerging signs that thanks in part to the UK's Air Passenger Duty (APD) others will be staying away. At the very time we are welcoming the world to our city, when we should be saying that Britain is open for business and open for tourism the underlying message from the government is very different.

APD, which all passengers leaving the UK have to pay, began as a relatively innocuous £5 yet its now the highest in the world and signs are emerging that the spiraling cost is leading to people either finding ways to get around paying the tax or avoiding the UK altogether. Both are clearly detrimental for the economy.

While the number of people booking flights into London during the Olympics has increased 31% from 2011 the picture for the rest of the UK is not so rosy. UKinbound say that the overall picture for bookings is "disappointing" despite the lure of the Jubilee and the Olympics. Outside of the Olympic period London too has suffered with bookings from Australia and New Zealand down 25% and 25% respectively. This is hardly surprising given that a family of four travelling from these countries now has to pay between £368 and £736 in APD to visit the UK.

There is also a rather curious phenomenon emerging: figures show that nearby European cities with hub airports, such as Paris, Brussels and Amsterdam are also enjoying a significant uplift in bookings around the Olympic period. Two key routes into and out of the UK - Amsterdam's Schiphol airport and Brussels with its convenient rail connections to London - look set to benefit as some passengers opt to transfer onwards to the UK. If these passengers depart by the same routes, many will avoid paying higher rates of APD or paying APD altogether on their outbound journeys.

Evidence also suggests that visitors are finding other ways out of the UK. Ferry operator Stena Line which, last year predicted that they would carry20,000 Indian passengers between Harwich and the Hook of Holland, 10,000 more than the previous year. It believes many of these are passengers avoiding the UK's APD on outbound journeys.

The LCCI along with other organisations have written to Jeremy Hunt, Secretary of State for Culture Media and Sport, to draw attention to this growing trend for tax avoidance and the damaging impact that APD is having on the economy as a whole. We want to Government to commission a proper study to examine what many businesses are witnessing.

Last week David Cameron said that "for the first time, we have a tourism strategy that reaches right across government, looking at policies from a tourism perspective". Levying the world's highest air passenger tax simply doesn't stack up with this.

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