Airlines call for independent air tax review

Airlines have called for an independent study of the impact of air tax on the UK economy following Chancellor George Osborne's decision to go ahead with a planned double-inflationary rise next April.

Full details of the higher charges will be announced by the Treasury on December 6 together with the Government's own review of air passenger duty, announced in the spring.

But in a joint statement issued yesterday, the heads of BA parent IAG, easyJet, Ryanair and Virgin Atlantic said: “In the cause of UK economic recovery, air passenger duty is an own goal – and the Chancellor has just scored another one.

"By increasing this tax by double the rate of inflation, he is further deterring inbound tourism and foreign investment, and choking off yet more job opportunities for young people. APD has no international parallel and has already cost the UK economy 25,000 jobs – that is what the Government should focus on.

"We call for the Chancellor to commission an independent study of APD's overall economic value. We have no doubt this would confirm that APD's negative impact on UK GDP significantly outweighs its revenue benefit for the Treasury. This tax must be abolished.”

The travel industry was offered a glimmer of hope when, during the delivery of his Autumn Statement to the House of Commons, Osborne announced a more favourable tax regime for businesses. He said: "We should not price British business out of the world economy; businesses will fail, jobs will be lost and our country will be poorer."

Later he went on: "If we tax firms out of existence, there won't be any tax revenues for anyone."

He appeared in a generous mood when announcing he was cancelling the planned rise in fuel duty in January to help "struggling families". The move would, he said, save families £144 on the cost of filling the average family car by the end of next year.

However, there was no mention of APD in his speech and the Treasury later confirmed the planned increase, announced in Osborne's Budget last April, would go ahead next year.

ABTA chief executive Mark Tanzer fumed: "The Chancellor said today that he wants to support British companies and not tax them out of business or the global economy but his actions on flight taxes do not match his words. The Chancellor's decision is bad for jobs, bad for growth and bad for passengers – ABTA will continue to lobby against these damaging tax hikes."

Civil Aviation Authority figures show that in 2010 there were 7.4m fewer UK passengers travelling through UK airports than in the 2009, while in Europe the number of passengers grew by 66.3m, said ABTA.

"In a further signal that APD is having a damaging impact on the British economy, the Office of Budget Responsibility, the Treasury's spending watchdog, cut the projections for APD income by £200 million in 2015/16, making clear the perverse and contradictory impact this tax is actually having," added the Association. "This is supported by recent ABTA research that revealed 43% of passengers say that high taxes would put them off flying."

By Linsey McNeill