New Zealand’s recent decision to increase the International Visitor Conservation and Tourism Levy (IVL) and visa fees has drawn criticism from the International Air Transport Association (IATA), raising concerns about its potential impact on the country’s tourism recovery. IATA argues that these policy changes could make New Zealand less appealing to international tourists, ultimately hindering the sector’s recovery beyond 2026.
Dr. Xie Xingquan, IATA’s Regional Vice President for North Asia and Asia-Pacific, expressed concern about the cumulative effect of these changes. He stated that the combined increase in both the IVL and visa fees would make travel to New Zealand more expensive, thereby decreasing its attractiveness to international tourists. This, he cautioned, could further delay the recovery of visitor numbers, potentially pushing it beyond 2026. This is particularly concerning considering the aviation market in New Zealand is currently lagging behind other major markets such as Australia, Canada, France, Spain, the UK, and the US, which have either already reached pre-pandemic passenger levels or are expected to do so by 2024. The added costs associated with the IVL increase and higher visa fees are likely to exacerbate this situation, making New Zealand less competitive in the global tourism market.
Dr. Xie highlighted the significant contribution of the travel and tourism sector to New Zealand’s economy. He emphasized that the government’s own analysis revealed a detrimental economic impact, indicating that for every dollar generated from the IVL increase, over three times that amount in economic activity would be lost. He urged the government to prioritize measures that enhance New Zealand’s competitiveness as a travel destination rather than hindering its development. Dr. Xie criticized the New Zealand government for disregarding IATA’s submission during the public consultation process, which advocated against the IVL increase. He pointed out that the government announced the increase in the 2024 budget even while the consultation process was ongoing, raising concerns about the transparency and effectiveness of the decision-making process. Furthermore, Dr. Xie expressed disappointment over the absence of a clear plan on how the funds raised by the IVL would be allocated. He suggested that the government consider utilizing these funds to support projects that promote the decarbonization of the aviation sector, aligning with global sustainability goals. He specifically urged the government to prioritize allocating these funds to projects that contribute to the decarbonization of the aviation sector. Dr. Xie used Thailand as an example of a country taking a more proactive approach to encourage tourism. Thailand, in June, decided to scrap its plans to introduce a tourism tax on air travelers, choosing instead to promote tourist spending in other areas of the economy. This decision aimed at bolstering Thailand’s appeal to international tourists, standing in stark contrast to New Zealand’s decision to increase travel costs.
The tourism and hospitality industries in New Zealand are still grappling with the aftereffects of the pandemic, and these new financial barriers may further hinder their recovery. The IVL increase, coupled with higher visa fees, could deter budget-conscious travelers and tour operators from including New Zealand in their itineraries. The IATA has urged the New Zealand government to reconsider its stance, emphasizing that these policy changes could severely undermine the country’s tourism competitiveness, a vital sector that contributed significantly to the national economy before the pandemic. With the global tourism industry steadily recovering, New Zealand’s decision to increase the International Visitor Conservation and Tourism Levy and visa fees risks hindering its recovery. While other countries are taking steps to attract more visitors by reducing or eliminating tourism-related taxes, New Zealand appears to be moving in the opposite direction. IATA’s concerns reflect the broader fears that New Zealand could lose its appeal as a prime travel destination unless the government adopts policies that enhance, rather than diminish, its competitive edge in the global tourism market.
