Published On: Fri, Feb 27th, 2015

InselAir suggests other policy to stimulate regional traffic

Tax-reduction for short 'regional' flights

InselAirWILLEMSTAD - Airlines and passengers are currently taxed and charged disproportionately by governments which cause ticket prices to rise resultingconsequently in a decrease in the number of 'arrivals'. InselAir supports the policy being carried out in other countries, including Brazil, which serves to promote regional traffic. Within the policy there is a distinction between regional and international flights with regard to taxes and charges.  In some cases even up to 70% less taxes and charges for regional flights which obviously results in lower ticket prices for customers.  Such a system would work well in the Caribbean region; ticket prices will drop and there will be an increase in regional traffic.

Everyone has the right to travel
"Such a 'regional' policy should also apply to flights between the ABC islands and St. Martin, all within the Kingdom of the Netherlands," says Mr. Heerenveen. "Passengers traveling from Aruba to Amsterdam pay 34.25 USD in taxes for a 9-hour international flight and our passengers pay the same amount for a 25-minute regional flight from Aruba to Curacao!” according to Mr. Heerenveen, Chief General and International Affairs of InselAir. InselAir provides airlift to everyone, regardless of their income. This means that everybody should have the opportunity to purchase tickets at an affordable price. And this is currently impossible due to the high government charges and taxes. And, there are also discrepancies in the tax policy; Curacao - Aruba/St. Martin: 20 USD, Curacao - Bonaire: 10 USD and Aruba - Curacao 4.25 USD. And there is even speculation that the airport departure tax in Curacao will go up again. To provide everybody the opportunity to, and in some cases the need to travel, InselAir rolls out a few times a year, the well-known Blow Out Sale and offers via its website weekly Last-Minute rates. "This is at the expense of our own margins," says Mr. Heerenveen. "But we want to be accessible to everyone, so we also always have a standard number of seats available at an extra low rate," ends Mr. Heerenveen.

An example: Curacao-Aruba
A (starting from) ticket, Curacao to Aruba, with a Fokker 50, costs 376 NAF (268 NAF: 108 NAF base-fare + taxes and charges), of which as much as 30% consists of taxes and charges. If we were to adopt the Brazilian model in this region this ticket price would be at least 15% cheaper, 320 NAF. A significant difference of 56 NAF. In this example we have only taken into account the departure tax and the Air Traffic Control (ATC) charges which are much lower in Brazil for regional flights. "The local authorities in the Caribbean complain that regional ‘arrivals’ are decreasing while their own policies are the root cause of this," explains Mr. Heerenveen. Further, he states that, “In the above example NAF 109 (30%) directly goes to the government and of the remaining 267 NAF (70%) InselAir has to pay passenger handling companies, reservation systems (GDS), fuel, insurance, finance, credit and debit card fees, travel agents commission, maintenance, payroll, Social Insurance Bank (SVB), pensions, security, aircraft, wages, rent for the check-in counters at various airports (which in some cases, such as in Aruba, are included in the departure tax; while at Hato airport, the airlines have to cover these costs), catering and much more. InselAir does all the work, runs the greatest risk of all parties involved and in the end remains with just a 2-3 % profit. Which is immediately invested back into the company," concludes Mr. Heerenveen. InselAir still offers, despite all the increases, competitive rates. Traveling with InselAir from Curacao to Bonaire for instance is still cheaper (183 NAF, excl. taxes, return) than taking a taxi (return) from Hato Airport to Santa Barbara Beach Resort, which costs about 235 NAF (2 x USD 65). This taxi is left with a much larger profit compared to the 2-3% (3.70 - 5.50 NAF pp) that InselAir makes. In 2014, InselAir paid more than 30 million NAF in taxes and charges to the government and other organizations in Curacao via passengers that traveled with InselAir.

Cost of maintenance
The periodic and mandatory maintenance on aircrafts is determined by the number of flight hours or the number of cycles (1 takeoff + 1 landing = 1 cycle). This means that an aircraft operating between Curacao - Bonaire, despite its 15 minutes in the air, still completes one cycle, while a plane flying from Curacao to St. Martin (+/- 80 mins) also completes 1 cycle. This is structured in this manner due to the ‘maintenance work’ which takes place for the most part during takeoff and landing. Because of InselAir’s frequent short flights between the islands, InselAir needs to perform maintenance on its aircrafts operating on these routes 3 to 4 times more compared to aircrafts operating on longer flights, such as Miami and Charlotte.

Cost of fuel
A ticket from Curacao to Bonaire costs NAF 217 (round-trip, incl. taxes); fuel costs for this ticket (per passenger) is about 10 NAF (return, based on an occupancy of 80%) which is 4.6% of the ticket price. On short flights (15 mins to Bonaire) a Fokker 50 simply does not burn as much fuel. Given the recent drop in the oil price this would provide a 3 NAF advantage per passenger per ticket causing the ticket price in the above example to drop from NAF 217 to 214 NAF. This is on InselAir’s short flights just a fraction of the total ticket price and is disproportionate to the constant increase and additional charges and taxes which InselAir is being confronted with and which causes ticket prices to increase.

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