Business

Airlines call for Air Passenger Duty to be scrapped

  • 17 November 2011
  • From the section Business
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Four airlines from the UK and Irish Republic are calling for the UK government to scrap Air Passenger Duty.

The tax, which is applied to almost every ticket on a flight originating in the UK, has risen sharply since it was introduced in 1994.

When APD was introduced, passengers whose journey originated in the UK paid between £5 and £40 per ticket. They now have to pay from £24 to £170.

It is opposed by Easyjet, Ryanair, Virgin Atlantic and British Airways.

The airlines say it penalises British holidaymakers and makes the UK a less attractive destination.

The amount of APD that passengers have to pay depends upon whether their flight is short or long-haul, with business and first class travellers having to pay more than those with an economy ticket.

A Treasury spokesman said that the government had frozen APD this year, and that, unlike many other countries, the UK did not levy VAT on flights.

Environmental campaigners opposed the airlines' move, saying APD helped combat global warming.

"Air Passenger Duty plays an important part in tackling aviation's significant impact on climate change," said Richard Dyer of Friends of the Earth. "Ministers must stand up to this unfair lobbying."

Revenue raising

BBC transport correspondent Richard Lister said: "The chancellor put this year's increases on hold, but a further rise of around 10% is expected next year.

"The airlines say that as the tax was first introduced to combat greenhouse gas emissions it should be abolished with the introduction of the EU's Emissions Trading Scheme next year.

"The government is considering making changes to Air Passenger Duty, but has made clear that it regards the tax as an important way of raising revenue, and expects it to generate more than £2bn this year."

Ryanair chief Michael O'Leary told the BBC that removing APD would not increase the airlines' profits.

"This has nothing to do with our profits. It is paid by families, paid by passengers going on holidays," he said.

"If it is scrapped, the money goes straight back into families' pockets."

Mr O'Leary also said that as a result of APD, 30 million fewer overseas visitors had come to the UK in the past five years.

He added that with UK passengers having to pay the new Emissions Trading Scheme tax from January, they will be "taxed on the double".

Willie Walsh, chief executive of International Airlines Group, the owner of British Airways, called on Chancellor George Osborne to set up an independent review of APD.

"This tax is hugely damaging and must be scrapped," he said.

"We challenge the chancellor to undertake an independent review, which will show that the net effect of this tax is damaging."

Consultation process

A Treasury spokesman said: "We consulted on a range of reforms to APD, including simplifying the tax and making it fairer by extending APD to private jets.

"We will say more on this in the coming weeks.

"It is also important to remember that the UK is not the only country with an passenger duty, and unlike many other countries the UK does not levy VAT on flights."

At the start of this month APD was reduced for direct long-haul flights from Northern Ireland, in response to competition from services in the Irish Republic, which has an Air Travel Tax of just three euros to any destination.

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