Airlines Call For An End To UK Air Passenger Tax

November 17, 2011

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The UK and Ireland's biggest airlines on Thursday called on the government to scrap Air Passenger Duty (APD), saying its negative impact on the economy was outweighing any benefit from the revenue raised.

Passengers have to pay between GBP£24 and GBP£170 in APD, depending on the length of flight, substantially more than when the tax was introduced in 1994. Business and first class passengers also have to pay more than those in economy.

In an open letter to Chancellor George Osborne, the chief executives of easyJet, Ryanair, Virgin Atlantic and British Airways owner IAG called for an independent report on the economic effects of the tax.

They said what is happening in the UK mirrors what occurred in the Netherlands in 2008/9 when a similar air tax was imposed. That levy was abandoned after a year following a study which showed the harmful effects on the Dutch economy were nearly four times greater than the revenue it produced.

"For hard-working families APD is a tax too far for the privilege of taking a well-earned holiday. It is also a tax on tourism and a tax on business," the CEOs said in the letter.

"Aviation doesn't just drive exports -- it is a major exporter in its own right with our airlines earning nearly GBP£11 billion of foreign revenues every year. Tourism is one of the UK's most important earners and is worth GBP£115 billion to the UK economy."

IAG's chief executive Willie Walsh said the airlines had come together in a rare show of unity to demonstrate their conviction over the issue.

"How often do you see four bitter rivals who are often abusive to one another come together like this? This is how serious we are to see APD scrapped," he said at a news conference in London.

Ryanair's Michael O'Leary said airlines would not benefit in terms of profitability from the levy being scrapped.

"If the tax is scrapped the money goes into the pockets of travellers-not the airlines," he said.

The airlines say the tax, which is applied to most flights originating in the UK, penalises leisure travellers and makes Britain a less attractive destination.

First introduced to combat greenhouse gas emissions, they said it should be abolished with the introduction of the EU's Emissions Trading Scheme next year.

"We take our responsibility to the environment very seriously and have taken steps to reduce our impact. We support emissions trading (ETS) in principle but a combination of both APD and ETS when it is introduced is unsustainable," the airline CEOs said in their letter to Osborne.

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

"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," the spokesman said.