ETA, Tax on Shopping Hurt UK Global Connectivity, Economy—Heathrow CEO

| May 17, 2024
ETA, Tax on Shopping Hurt UK Global Connectivity, Economy—Heathrow CEO

Heathrow Airport’s CEO has again criticized the United Kingdom (UK) government for enacting policies that hinder the airport’s success.

The UK’s largest airport announced that, based on its performance in April, Heathrow is on track for its busiest year ever.

Heathrow’s passenger numbers increased by 4.8 percent last month, welcoming 6.7 million passengers, reported The Telegraph.

It also had its busiest day since October 2019, as 1,337 planes either took off or landed at the airport on 19 April 2024.

However, Thomas Woldbye, Heathrow Airport chief executive, warned that its success is threatened.

“To unlock our full potential to help grow the country’s economy, we need the government to implement policies that support UK aviation’s ability to compete globally,” he said.

Woldbye criticized the UK government’s new digital travel permit scheme, the Electronic Travel Authorization (ETA).

The ETA costs £10 per application. It will be mandatory for all visa-exempt nationals traveling to the UK for short trips.

It is also required for transit passengers regardless of whether they are going through border control.

Heathrow’s boss also said scrapping tax-free shopping for international visitors does not help encourage tourists to stay and spend.

“Initiatives like the introduction of unnecessary visas for transiting passengers, the absence of tax-free shopping, and the recently proposed hike in business rates underscore the need for ministers to take a cross-government approach to policymaking,” he added.

These measures are “curtailing the UK’s global connectivity,” Woldbye said.

ETA for transit passengers hurt

Currently, only travelers from Bahrain, Kuwait, Jordan, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) need an ETA to visit the UK.

However, the UK government plans to impose the ETA on all non-visa nationals, including citizens of Europe, the United States, and more.

The ETA aims to enhance border security. However, Healthrow’s Woldbye, along with other airline industry professionals, said it puts UK airports at a huge disadvantage.

He argued that requiring the ETA for connecting passengers may drive them to transit in other major European airports that allow it for free.

It may already be having an impact as Heathrow recorded its lowest monthly proportion of transfer traffic in more than a decade.

The world’s fourth busiest airport has received 19,000 fewer passengers traveling from Qatar to the UK since the ETA was introduced in November 2023.

Heathrow Airport services about 25 million connecting flights annually for around 18 million transiting passengers.

UK-based airlines, such as British Airways and Virgin Atlantic, may also see fewer people flying with them.

Transit passengers and connecting flights contribute to Heathrow Airport’s status as a central global hub.

This is vital to the UK’s tourism, trade, and international connectivity, allowing London travelers easy access to other global destinations.

Still, the government firmly believes that all non-visa travelers, including transiting passengers, must comply with the ETA requirement.

This is crucial for the scheme to effectively and successfully enhance UK border security.

Taxing tourists through shopping

Woldbye also said that taxing items bought by international tourists in the UK since 2020 had been hurting the economy.

The UK Treasury has claimed that scrapping tax-free shopping for UK visitors would cost the country about £2 billion.

However, some have argued that the new policy costs the Treasury about £11 billion a year by discouraging tourists from visiting the UK.

According to a 2023 study by the Centre for Economics and Business Research, it deterred two million tourists from visiting.

ALVA director Bernard Donoghue said abolishing tax-free shopping led to a “significant decrease” in overseas tourists’ spending.

He added that the UK is “missing out on expensive items being bought by visitors worldwide.”

Without the tax-free shopping policy, visitors would cut their UK holiday short and visit other European countries to do their shopping.