March 24 - Travel Industry Needs To Tear Down Its Silos


Today, travel industry issues of strategic importance facing suppliers, distributers and customers in one country can rarely be contained within a single border. For example, an airline distribution policy in Germany, at odds with corporate managed travel interests, can be quickly emulated by airlines in the UK and elsewhere. The globalization of the travel industry has made counterproductive policies in one country of near-immediate concern in others in areas such as security, the environment, duty of care, distribution and airline industry concentration.

Taxation is certainly at the forefront in this sense punctuated by Wednesday’s announcement by Rt. Hon. George Osborne MP, Chancellor of the Exchequer that there will be no increase in the Air Passenger Duty (APD) until 2012. The Chancellor also indicated that a consultation would commence straightaway to examine the efficacy of the current distance banding for assessing the duty wherein, for example, the Caribbean carries a higher tax charge than more distant California. The Association of British Travel Agents and the Scottish Passenger Agents' Association as well as other organizations have all done a brilliant job in raising awareness of this harmful tax.

While this development is welcome news for the viability of the UK national air transportation system, and for foreign destinations heavily dependent upon British holidaymakers, much more work needs to be done. The current level of duty still represents a huge problem for tourism-dependent nations and it must be radically reduced (not increased in 2012) to bring the UK back into competitive alignment with other countries for business-related travel activities.

This week, some 70 corporate travel departments, TMCs and tour operators from around the world transmitted a letter to Rt. Hon. George Osborne MP, Chancellor of the Exchequer and Rt Hon Michael Moore MP,Secretary of State for Scotland urging a reduction in the APD. The duty has become a burden on the competitiveness of the UK for meetings, incentive trips, conventions and tourism. Signatories to this letter included Makino, Inc., from Japan,Dnata Travel Services from Dubai, Argo Travel from Greece, Qiagen Group, from The Netherlands, Alfa Laval from Sweden, Travel Leaders from the U.S., Li & Fung Group from Hong Kong andUNIGLOBE Normark Travel Inc. from Canada.

Many of these signatories saw an opportunity to thank their UK colleagues and return a favor for the many times over the years that UK organizations like the Scottish Passenger Agents' Association joined advocacy initiatives beyond their shores. However, national economies have become more interlinked and these signatories are all negatively impacted by the onerous APD whether by reduced tourism to their countries or by the UK increasingly pricing itself out of the markets for meetings, incentive trips and conventions. They are indeed stakeholders in UK tax policy as well as those of many other countries.

The old model of each country’s travel organizations worrying about its own problems is outdated. The travel industry is an assemblage of different national and cross-border interests toiling away on issues within individual silos that correctly looks to governments like it is highly fragmented and seemingly incapable of agreeing on and prioritizing its own problems, let alone solving them. The opportunity is to innovate a new travel industry collaboration model wherein talent, expertise, in-kind services, credibility and connections are combined and leveraged to bring rational solutions to realization in a timely manner.

When representatives from diverse travel industry organizations converge, for example, on the European Parliament or U.S. Congress with a unified position and message regarding an issue, the rarity of such optics of collaboration in an otherwise fragmented industry can cause officials to want to cooperate with the group. This can lead to more sound and timely policy decisions.

The reprieve for the APD should be taken advantage of by strengthening a global coalition of stakeholders ahead of 2012 when it will be likely proposed that the APD be increased again. Moreover, the EU Emissions Trading System will kick in during 2012 effectively taxing the UK twice for its role in protecting the environment. If not effectively addressed in 2011, the impact from 2012 on could be more serious by orders of magnitude.

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