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Taxes, charges and duty news
On the subject of your holiday money, this New Year has seen some interesting developments from travel companies, airlines and the UK government – some good, some less welcome ….
Tour operator Thomson has announced that it is to stop imposing fuel supplements on its holidays and that it will include all taxes and charges in any price quoted. Thomson’s managing director, Peter Rothwell, said travel companies now have no justification for charging a fuel supplement. He said the higher cost of fuel should be incorporated into the cost of the holiday. “Companies are continuing to hit their customers with this additional charge,” he said. “They are simply baiting customers with artificially low prices, then stinging them with supplements.” Rothwell estimates that the scrapping of the fuel surcharge could reduce prices by around 50 euros per person on packages across Europe.
Criticism has been mounting for some time over airlines that offer attractive initial prices that are exclusive of any extras. Last month the Trading Standards Institute (TSI) called for airlines and travel companies to include any extras in advertised prices. For example, a recent survey found that low-cost flights can quadruple in price when all the taxes, fees and charges are added.
Airlines have steadily increased fuel supplements since 2004, in order to offset rising oil prices. For example, the fuel supplement for a return long-haul flight with British Airways has risen from five pounds sterling in 2004, to 70 pounds sterling this summer. However, the recent fall in oil prices has led other airlines, including Virgin Atlantic, Air France and KLM, to reduce their fuel supplements.
Air passenger duty goes up
The British Chancellor has decided that as of February 1, 2007, air passenger duty – which travellers have to pay each time they leave a UK airport – will increase from five pounds sterling to 10 pounds sterling for economy-seat passengers on domestic and European short-haul flights.
It will double from 10 pounds sterling to 20 pounds sterling for those in business or first class seats. The air tax will double from 20 to 40 pounds sterling for the most basic economy seat travellers on long-haul flights. On all other long-haul seats, the tax will go from 40 pounds sterling to 80.
Airlines have condemned the move, with British Airways accusing Mr Brown of “revenue-raising pure and simple” and of treating passengers like cash cows. Airlines said his policy was aimed more at filling Treasury coffers than improving the environment.
Green groups said the tax rises did not go far enough to deter people from flying or contribute towards the true cost of the pollution it generated.
Mike Rutter, chief commercial officer of low-fare airline Flybe, said: “This is the poll tax of the skies and will hit ordinary travellers hardest of all. It will do nothing to tackle climate change.”
First choice goes ahead with carbon scheme
More positive news is that First Choice is to go ahead with a revised carbon-offsetting scheme, after initially putting the plan on hold following the government’s doubling of Air Passenger Duty (APD) from February.
First Choice originally announced last month that it would be introducing an “opt-out” scheme, under which customers would be encouraged to pay one pound sterling (50 pence for children). The company promised to match the contributions and donate the total amount to certified carbon offsetting schemes.
However, following the decision to double APD – and the announcement that tour operators were expected to pay the tax retrospectively for bookings already taken – the company put the scheme on hold.
The tour operator now says it will only be matching pound for pound donations for holidays departing after November 2007, rather than during the summer peak.
First Choice managing director, Dermot Blastland said: “We planned to introduce a scheme whereby the payments made by our customers and matched by First Choice would go into certified carbon offsetting schemes. Instead, this ridiculous tax has been imposed and has meant our plans have had to be delayed. As a company we are expected to pay the government between four to five million pounds sterling in retrospective APD … meaning that we won’t be able to start matching customers’ payments on summer 2007 bookings.”
The UK Foreign Office has warned travellers to avoid the city of Bangkok in Thailand.
The travel advice, posted on the Foreign Office website, warns that: “A number of bombs exploded in Bangkok on December 31, 2006. There is a possibility of further attacks in coming days. British citizens are advised not to travel within Bangkok unless absolutely necessary, until further notice. There is a high threat from terrorism throughout Thailand. Attacks could be indiscriminate and against places frequented by foreigners.
“The advice is weighed very carefully and based on the best information available,” a Foreign Office spokeswoman said.