Fiji’s plan to raise departure tax may hurt the country’s competitive edge in the tourism market, as price-conscious travelers may prefer cheaper destinations. This warning comes from ANZ’s international Pacific economist, Dr. Kishti Sen. He cautioned that the boost from affluent and savings-ridden Australian tourists, which held up Fiji’s post-COVID tourism industry, is now waning.
With Australia being Fiji’s largest tourism source, Australians are now frequenting their favored Southeast Asian destinations as their cash savings returns to pre-pandemic rates of around 14%. Meanwhile, tourist arrivals from New Zealand, the second biggest source, are also slowing down. According to Dr. Sen, it’s essential for Fiji to compete on price to retain tourists, especially as households in key markets continue to grapple with cost-of-living pressures.
Raising the departure tax, he warned, may undermine Fiji’s value-for-money appeal in an ever-tightening competitive pitch. Fiji is set to reclaim status as having one of the world’s highest airport departure taxes as it will surge to $170 next month and $200 by August 1, 2023. This increase was announced in the 2024-2025 National Budget as the government asserts that the thriving tourism industry can shoulder this rise.
In light of this, Fiji’s Minister of Finance, Professor Biman Prasad, underlined that tourism has robustly rebounded. However, he argued that supply, not demand, remains an obstacle for the sector. The departure tax had previously escalated from $100 in 2012 to $200 in 2013 before it was hauled down to $100 in 2020 amidst the COVID situation. The upswing is predicted to yield an extra $46.4 million in revenue this year.