Aviation and tourism are vital components of the Caribbean economy. They provide employment, foreign exchange and taxes which in turn support schools, hospitals, national security and much more. Despite this, it seems not to be widely understood outside of tourism ministries and organisations that the industry requires defending externally with as much energy and passion as was once the case with older industries such as sugar or bananas.
The difference now is that unlike preference-based industries that were in one way or another externally subsidised, tourism, for the most part, operates in a global and ruthlessly competitive environment where policy decisions – international or domestic – can rapidly undercut the industry’s viability. Put another way, the economic benefits of tourism can be lost far more rapidly than those that flowed from industries which were, or still are, the subject of government to government arrangements.
So far this fundamental difference has tended only to be appreciated beyond tourism circles when a decision is taken in North America or Europe that directly threatens visitor arrivals or the diaspora. The UK’s much disliked Air Passenger Duty or the previous US decision to introduce rapidly passports for US citizens re-entering the US are good examples of where the region found itself in a reactive situation, trying politically to offset the worst effects of what had already been imposed.
What has not yet taken hold in the region at either a Caricom or a national level is the need to try to look over the horizon to see what policy initiatives might be underway that may materially affect the fortunes of the wider Caribbean economy.
For example, a recent British government document has made clear the UK’s long-term thinking in the context of climate change, its thinking in policy terms about aviation, and by extension on tourism. From it, it is not hard to see where its proposed policy responses might lead. What is being considered ought to give the region pause for thought if, as is quite possible, the approaches being considered could result in similar policies being adopted by other G20 developed nations.
The new thinking originates with the UK Climate Change Committee (CCC), an independent body that advises the British government and the UK Parliament on setting and meeting carbon targets in relation to the impact of climate change. In 2009 it produced a report on the policy that should be adopted when it comes to reducing carbon emissions from aviation up to 2050. The report and the subsequent formal response from the British government are largely technical in nature. However, they demonstrate an approach that suggests that in the near future the UK’s climate change strategy may impact on future visitor arrivals from the UK and other EU nations on all long haul destinations.
The UK Climate Change Act 2008 required the British government, by the end of 2012, either to include international aviation and shipping emissions in the UK’s wider 2050 climate change target or to submit a report to Parliament explaining why it will not do so.
In preparation for a formal British government response, Britain’s Department for Transport has now made recommendations about the types of policy that might be adopted to ensure that such emissions are reduced and has started a consultation exercise.
The report suggests a number of policy measures that might be adopted that have implications for the Caribbean in the areas of tourism and aviation. One of these is encouraging behavioural change to enable a reduction in leisure travel. The approach envisages an overall two per cent reduction in leisure travel and a five per cent switch in leisure travel from long haul to short haul destinations. Although not spelt out in detail, it would suggest that UK government thinking is moving towards a policy that favours short haul over long haul travel and that there is a need for a study of the wider impact of imposing disincentives on leisure travel, particularly to politically less sensitive longer haul destinations.
Other measures suggested include the adoption of an escalating penalty on aircraft departing below maximum take-off weight, a proposal that could affect the frequency of out-of-season less than full flights to the Caribbean. There is also a suggestion that there is acceleration in airline fleet turnover by preventing all aircraft of more than an agreed age from using UK airports.
The UK government document also seems to suggest that while the UK Treasury has said that the inclusion of aviation in the EU’s Emissions Trading Scheme will cover aviation’s CO2 emissions, other government departments have not ruled out the possibility of other measures.
The underlying message of all this is that if the Caribbean is unable to develop a timely response to changing policy in partner countries, the economic consequences could be severe.
Unfortunately the region seems less and less geared up to responding rapidly when potential threats to the region’s economic viability emerge. Rather the drift away from regionalism has created a situation where reaction to such developments is delayed, too often uncoordinated, and then too late or unable to leverage change.
An ever increasing number of nations beyond the region are introducing policy measures that are extra territorial in effect.
The example quoted may appear to be marginal or distant from the principal economic challenges concerns that the region has. But let it pass without question or without a concerted political response and the Caribbean will gradually become a weaker and lesser place.
Previous columns can be found at www.caribbean-council.org
