Flights to NZ cheaper as tax cut

JOHN HARTEVELT IN LONDON
Last updated 07:50 20/03/2014

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Air travel out of London should get cheaper after the British Government finally relented to repeated pleas to cut air passenger duties.

In his Budget announced overnight, Chancellor George Osborne revealed the top two bands of air passenger duty would be scrapped in April next year.

Flights to New Zealand are levied in the highest band, which has increased from £10 (NZ$20) for economy class passengers in 2007 to £96 (NZ$185) this year. When the band is scrapped next year, the levy on travellers flying to New Zealand will drop to £71 (NZ$137).

For a typical family of four, the change will translate to a saving of £100 (NZ$192).

The announcement has delighted British travel companies and will be welcomed by the tourism operators in New Zealand.

Prime Minister John Key has discussed the levy with successive British counterparts Gordon Brown and David Cameron since it began to increase in 2008. He was rebuffed each time as the British Government argued it needed the revenue to help recover from large fiscal deficits.

But Osborne today told the House of Commons that the tax "hits exports, puts off tourists and creates a great sense of injustice among our Caribbean and South Asian communities here in Britain."

"This will eliminate the two highest rates of [duty] charged on flights to countries over 4000 miles [6430 kilometres] from Britain, cutting tax for millions of passengers travelling to China, India, Brazil and many other emerging markets," he said.

In an article published ahead of the Budget, chief executive of the London Chamber of Commerce and Industry Colin Stanbridge urged a rethink of the levy. He said 250 chief executives had signed a petition calling on Osborne to review the tax.

Key, who is visiting China and will travel to Europe, has welcomed the decision.

"I have consistently advocated for such a change, which will benefit travelling New Zealanders and encourage more tourists to come to New Zealand," he said.

Britain was an important tourism market for New Zealand, but Key said tough economic conditions had depressed tourism growth, which wasn't helped by the levy.

Before the higher levies were introduced in 2008, Britain was New Zealand's second-largest visitor market by both arrivals and spending. It was now New Zealand's fourth-largest visitor market, with 191,632 arrivals in 2013.

"People from the UK who are thinking of coming to New Zealand for a holiday will be delighted by this news; as we are," the prime minister said.

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"It will also be welcomed by our tourism operators in New Zealand who have also lobbied for these duties to be removed."

A statement from the airline Virgin Atlantic said the British Government had recognised the damage the duty was causing exporters and the travelling public.

"This is a positive step that recognises the impact of this economically damaging tax," the airline said.

- Stuff

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