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June 12, 2009

ITM builds on WWF work on personal loyalty programmes

The Institute of Travel and Meetings (ITM) launched a paper this week, for members and subscribers of ICARUS, a project dedicated to responsible corporate travel and meetings.

The report looks at the issue of personal loyalty programmes (PLPs), their impact and the tax treatment of such schemes. It identifies that PLPs, such as frequent-flyer or frequent-stay schemes, can undermine managed travel programmes. It also suggests that the current tax regime may discourage companies from trying to introduce similar schemes for travel avoidance.
The report builds and expands on a paper originally produced by Dr Stephen Potter, Professor of Transport Strategy of The Open University, and Keith Buchan, of the Metropolitan Transport Research Unit, commissioned by WWF-UK last year.

The original draft focused on personal loyalty points applied in the aviation sector, but ITM has broadened the report to cover all loyalty schemes in the travel sector as a preliminary look at the subject in advance of its second ‘Exploring Transparency in Remuneration’ report, due later this year.
“There are two key issues identified in the report,” said ITM chief executive Paul Tilstone. “The first issue is that these schemes muddy the water for those trying to manage travel programmes and can lead to higher travel costs and non-preferred suppliers being used.

“The second is that the tax treatment of these schemes does little to encourage similar schemes through which companies are trying to incentivise video conference use. This acts as a barrier for change.”
ITM suggested that the Government should offer tax incentives for programmes designed to reward those who move to videoconference or other communications technology rather than travel.
Tilstone went on to explain why the report is considered “preliminary”.

“The diverse nature of these issues means more work is needed,” he said. “The issue of influence at point of sale of these schemes will be explored further by ITM later in the year, whereas the issue of taxation is one we will be engaging government on, on an ongoing basis.”
Copies of the report are available free of charge to members at www.itm.org.uk

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