Tax slash brings hope for UK air passengers

The Government is coming under increasing pressure to slash air passenger duty for the whole of the UK after chancellor George Osborne reduced the tax on long-haul flights from Northern Ireland.

ABTA hailed the reduction as a "welcome first step" and a "clear indication that the Government is listening to the industry's concerns over the damaging effects of APD."

TUI Travel has called on the government to go further and reduce APD for the rest of the UK when the EU Emissions Trading Scheme is introduced in January, which will force airlines operating within Europe to pay for their pollution.

TUI head of regulatory affairs for aviation Eddie Redfern said: “We look forward to a further review of APD banding and also the amending of the anomaly of Premium Economy charges that particularly hits the family going on holiday, who just want a little extra legroom.”

The chancellor announced that APD on long-haul flights from Northern Ireland will be reduced to the same as the short-haul rate from November 1, slashing it from £60 to £12 per passenger in economy and £120 to £24 for business and first class passengers.

The reduction was announced after Continental Airlines threatened to stop flights from Belfast because of the tax. Industry bodies had also argued that Northern Ireland was a special case because passengers could fly to Dublin with much lower taxes.

Osborne said that due to Northern Ireland’s ‘unique circumstances’, it was looking to devolve aspects of APD to the Northern Ireland Assembly to enable Northern Ireland to compete on a more level playing field.

The treasury statement read: “Continental Flight CO95 from Belfast International to New York/Newark will continue to operate, maintaining Northern Ireland’s vital economic air link to North America, and Northern Ireland will gain a fresh opportunity to develop other long-haul routes to the rest of the world.

“By announcing this immediate cut and our intention to devolve aspects of APD, the UK Government is renewing its commitment to stimulating and rebalancing the Northern Ireland economy.”

The Chancellor had been expected to confirm a double-inflation tax increase for flights from the rest of the UK in his Autumn Statement on November 29, but Virgin Atlantic said it hoped the increase – proposed for next spring – would now be cancelled.

"As the UK has some of the highest aviation taxes in the world, we would suggest that the same arguments should apply to the rest of the UK, which risks losing
business to Continental European hubs to the detriment of the British economy as a whole," said Virgin Atlantic's chief commerical officer Julie Southern.

Simon Buck, CEO of the British Air Transport Association – part of the Fair Tax on Flying alliance – said the cuts in Northern Ireland did not go far enough.

"This one-off tax cut for transatlantic passengers does nothing to help people travelling between Northern Ireland and the mainland who still face a double APD on all outbound and incoming domestic flights," he said.

"This is in addition to the APD that continues to be levied on all flights to Europe. Indeed, it is these other routes that will effectively be subsidisng transatlantic travellers, and doing nothing to help the passengers or airlines that are suffering from the
already high levels of APD."

A recent survey conducted for ABTA by ComRes, found 75% of MPs feel further rises in APD will price ordinary people out of flying and urges the Government to reconsider further increases.

By Diane Evans & Linsey McNeill