Air Passenger Duty and Outbound Tourism Demand from the United Kingdom

Neelu Seetaram, Haiyan Song, Stephen J. Page

Research output: Contribution to journalArticle

17 Citations (Scopus)

Abstract

On November 1, 1994 an Air Passenger Duty (APD) was introduced in the United Kingdom, and since, this tax continues to be controversial. This article examines the effect of the ADP on UK outbound tourism demand for 10 international destinations. An autoregressive distributed lag model is developed and income, price, and tax elasticities are estimated. The income and price elasticities obtained, ranged between 0.36 and 4.11 and -0.05 and -2.02, respectively. The estimated tax elasticities suggest that the implementation of APD had a negative effect on UK outbound travel for five destinations and the demand is inelastic to changes in taxes although the magnitudes vary across destinations. The general message is that although the stated objective of APD is to reduce travel and associated carbon emissions, the effectiveness of APD, however, has been marginal; travelers are prepared to pay more in the main to maintain their demand.
Original languageEnglish
Pages (from-to)476-487
Number of pages12
JournalJournal of Travel Research
Volume53
Issue number4
Early online date14 Aug 2013
DOIs
Publication statusPublished - 1 Jul 2014
Externally publishedYes

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