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Article from BTNews 24 SEPTEMBER 2018

COMMENT: What APD really means

Although last week’s report into Air Passenger Duty (APD) appears under the flag of Airlines UK, the association is not the only body to have a view. There are some heavyweight comments in there which you might hope, given we are now into a particularly frenzied political season, will make those in power sit up and take notice.

The document is also notable for putting flesh on the bones of its predictable conclusion, that APD is damaging our industry. In so many words, APD was found to constitute as much as 50% of the price of an off-peak short-haul ticket (from UK to Poland) and 44% of the price of an off-peak long-haul ticket (from UK to Israel).

The report says the UK is losing out on new routes and abandoning others as uneconomic that but for APD might otherwise be viable.

For example, on the domestic front: Liverpool – Southampton; Bristol – Leeds Bradford; Edinburgh – Guernsey. Short-haul connections (excluding the UK): Belfast – Madrid; Southampton – Barcelona; Aberdeen – Munich. Long-haul connections: Bristol – Dubai; Edinburgh – Delhi; Birmingham – Tel Aviv.

Airlines UK chief executive Tim Alderslade said: “As we prepare to leave the European Union, the government should be doing everything in its power to create the right conditions for economic success.

“Levying the world’s highest rate of tax on air travel is incompatible with this goal. “The message from the industry is clear – APD is putting the brake on the UK’s economic growth with dozens of potential services, including long-haul connections outside of London, unviable under current conditions.”

Airport Operators Association chief executive Karen Dee said: “The report demonstrates again that APD severely limits the UK’s aviation connectivity. It shows that APD inhibits the creation of new routes and the expansion of existing ones, costing the UK economy through lost opportunities.

“With the government aiming for the UK to become a truly Global Britain, the report is further evidence that they must tackle this tax on trade in the upcoming Budget.

The AOA believes a cut of at least 50% in APD is vital for our post-Brexit future. This would bring UK APD in line with Germany, who levy the next highest aviation tax in the EU, and thus create a more level playing field for the UK aviation sector.”

Weighing in, easyJet chief executive Johan Lundgren said: “Removing APD would allow airlines to provide more routes and lower fares for passengers in the UK, offering even more choice and important economic connections. This is a clear opportunity for the government to help business all across the UK to do more business abroad.”

Lundgren’s counterpart at Virgin Atlantic, Craig Kreeger, added: “With Brexit on the horizon, the UK should be working harder than ever to demonstrate it is open for business, not levying the highest rate of tax on air travel in the world.

“We need the government to send a clear signal that it is serious about helping us to connect to international markets and that it sees our world-class aviation sector as a key component of the nation’s future economic success.”

Witham MP Priti Patel said: “Britain’s high rates of APD act as a barrier to economic growth and this report shows how this tax is damaging our country. When we are competing in a global market for businesses, investors and tourists to come to Britain this tax on travel puts people off and is stopping business from creating jobs.

“This tax needs dealing with so we can open up more trade links and travel routes to the rest of the world and attract more businesses and tourists into Britain.”

And from Strangford, Northern Ireland, MP Jim Shannon had this to say: “This is yet more compelling evidence that the current high level of UK APD is damaging the overall UK economy. We’re particularly hard hit in Northern Ireland as we share a land border with a country with no equivalent aviation tax.

“Every extra route means more quality jobs and increased growth. Northern Ireland needs action on this tax, and so does the rest of the UK; action to boost jobs and trade. My colleagues and I will be pushing hard for this in the upcoming Budget.”

BTN has long campaigned against not just the level but the very idea of (another) tax on flying. Finding out that this one can add 50% to the cost of a ticket to Poland and is depriving communities of routes that could boost business at both ends of the journey puts it into sharper focus than usual.  From London to Scotland for the day costs twice the tax that a very similar trip to, say, Amsterdam or Paris.  And there is no tax on Eurostar.

The real question is will the government listen?

(See also APD report shock in this issue).

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OUR READERS' FINEST WORDS (All times and dates are GMT)

All comments are filtered to exclude any excesses but the Editor does not have to agree with what is being said. 100 words maximum

David Starkie, London

Other than the congested airports APD impacts fares significantly (at Heathrow prices are demand determined, not by the cost of supply). If the Government could find a way of restricting APD to Heathrow (or lowering the rate elsewhere), without legal repercussions, from an economic point of view such a differentiation is to be encouraged.

Norman Bartlett,

Don't forget the other side of the argument for it's certain the 'other' side won't. Environment, Green Peace, Friends of the Earth. Emissions, aircraft climate change causing.

Alan Bowen, East Sussex

Before every Budget, the same story is trotted out and completely ignored by the government. APD produces a guaranteed £3 billion a year and more passengers travel from UK airports every year irrespective of the tax. Sometimes routes don't exist because of the lack of demand, not the tax payable