Bizarre new rates of ‘ill-conceived’ APD
Sunday, 02 Nov, 2009
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TravelMole Guest Comment by Air Berlin UK and Ireland country manager Titus Johnson
The great thing about World Travel Market is the opportunity it gives visitors from around the globe to interact.
I’ve lost count of the times that I’ve had enlightening and interesting conversations with people from countries and businesses that I’d never usually encounter.
Whether you’re from Lima or Luton, we’ve all got common concerns that stretch across national boundaries.
This year, though, UK delegates will have an extra headache. The reason? Our bizarre new rates of Air Passenger Duty. In fact, I’m half expecting complete strangers to come up and commiserate with me.
In case you’ve missed it, this month saw the first of two planned increases in the UK’s aviation tax.
The Government has taken an old-school approach, piling on the costs to reduce passenger numbers – and thus cutting CO2 emissions. By its own rather conservative estimates, the Government says higher APD rates alone will reduce passenger numbers by 1.5 million per year by 2030.
Hiking tax is always contentious, but this one looks particularly ill conceived during such straitened times.
As a carrier operating across Europe, Air Berlin has direct experience of how taxation affects sales in different markets, and Britain’s aviation outlook isn’t great.
Since June 2008 a total of 192 airline routes from the UK have been dropped. That is a serious threat to employment both at home and overseas.
The negatives are many and varied. APD is a regressive tax that hits poorer families hardest.
It is also badly structured, given that it is based on bands calculated to the capital city of each destination – meaning it costs more to fly to the Caribbean than to Hawaii. In the same vein, experts have warned this will have a disproportionate effect on many Commonwealth nations that rely on tourism for vital income.
What irks the most is that APD income is not ring fenced and does not work as a green tax.
People understand and accept the concept of paying tax for services, such as getting their bins emptied, but the UK government has lost this argument since none of the APD proceeds are used specifically for green initiatives.
Neither will the move cut emissions, since a MORI poll showed 90% of adults would consider flying long-haul via a European hub – increasing their CO2 footprint – rather than pay higher APD.
Contrast this with the experience of the Dutch, who dropped a similar airport tax in July.
There, a campaign by travel and tourism companies warned of the high economic costs that would result, including a 2% fall in inbound traffic and a total loss to the exchequer of almost €300 million.
As with our colleagues from other carriers, we will continue to call for these rises to be axed. UK aviation contributes more than £2 billion in taxes, more than enough to offset all its emissions.
This is a global industry and we can’t afford to stand out from the crowd.
Phil Davies
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