The high cost of regional travel remains a vexing issue for commuters between the Caribbean islands. Among the key factors contributing to these high costs are the taxes imposed by regional governments on airline ticket prices.
Intra-Caribbean flights often carry taxes and fees that exceed the base airfare, significantly increasing the cost of tickets for travel between islands. In contrast, Europe and Southeast Asia tend to have lower aviation taxes, especially for regional travel. Budget airlines thrive in those regions due to minimal fees and government support — a phenomenon not commonly seen in the Caribbean.
These taxes have several negative impacts on intra-regional travel as they discourage regional movement, with locals being priced out of flying between islands. In turn, this hurts tourism as visitors face unexpectedly high costs, reducing demand.
The taxes also strain local airlines. Homegrown carriers struggle to compete with subsidised foreign airlines, making it harder for them to survive in the market. Among those homegrown airlines is LIAT Air, often referred to as the “new LIAT.” The company, which began operations in 2024, faces several challenges, including the need to distance itself from its failed predecessor, LIAT 1974. These problems are only exacerbated by hefty taxes, as highlighted by airline CEO Hafsah Abdulsalam on the opening day of the State of the Tourism Industry Conference (SOTIC) 2025.
In an impassioned response to questions about the challenges contributing to high airfares, Abdulsalam emphasised that both her airline and regional governments must play their part in improving connectivity. Abdulsalam, who also revealed LIAT’s plans to connect the region with South America and Africa in the near future, noted that regional taxes remain a major issue.
“We need to be a lot more efficient, for efficiency reduces costs. Production and reduced costs ultimately reduce the amount we charge for the ticket,” she said.
“But then again there are also taxes and fees that we have to face. There are fees and there are taxes that are so high, that is still a shock to me. You find that in some destinations, especially when we run into problems, the taxes are much higher than the base fare. So, we do need to carry on the engagement and the discussions with the government, to see how we can reduce the fees and taxes that we have to pass on to the customers. We’re just revenue collectors for the government.”
Increased travel volume would support local airlines like LIAT, as well as airports and tourism-dependent businesses. More visitors also mean higher spending on hotels, restaurants, tours, and retail — fuelling job creation and GDP growth. To determine the feasibility of this initiative, tourism and economic officials must come together and conduct a detailed analysis of the region’s most fruitful industry. Whether steps in this direction will be taken following SOTIC 2025 remains to be seen.
So true! It is a wonder that there has been so little outcry when a CDB report released over a decade ago revealed that taxes accounted (then) for nearly half the cost of the average ticket. The Caribbean has some of the highest aviation taxes in the entire world.
If the governments would only reduce the taxes, it is likely that the increase in arrivals would more than offset the initial drop in revenue and regional commerce would also benefit.
@True Patriot. You are so very correct. These governments are unable to see beyond their noses.