Trade slams Chancellor for further rise in air tax

A further increase in Air Passenger Duty confirmed by the Chancellor today in his Autumn Statement has been labeled "unsurprising and self-destructive" by the Board of Airline Representatives in the UK.

Dale Keller, chief executive of BAR UK, which represents over 80 airlines, said even the pre-Budget levels of APD could not be justified.

"The latest increase takes us dangerously beyond the tipping point where the impact can only be negative to the economy," he said.

"The announcement comes as unsurprising from a government that is not listening to the wider industry, or international opinion, and is self destructive to its own objectives of attracting foreign investment and tourism."

BAR UK has joined ABTA in calling on the Government to urgently conduct a review into the economic impact of APD (see earlier story).

From April 2013, the tax on short-haul economy flights will remain at £13 but on all longer flights and in premium cabins it will rise by £2 per passenger.

The Government has also introduced a new tax rate for private jets, which were previously exempt from APD. Passengers on flights with fewer than 19 seats will have to pay £52 to £376, depending on the length of flight, from April 2013.

"BAR UK is calling on the Government to urgently conduct a review into the economic impact of APD, which we are certain would confirm that a radical review is required to achieve a fair, proportionate and internationally competitive tax before the UK loses more ground to competitors," added Keller.

The Chancellor used his Autumn Statement to announce a freeze on fuel duty.

Darren Caplan, chief Executive of the Airport Operators Association, said: "It defies belief that the Treasury continues to ignore the calls of 200,000 constituents regarding the UK’s eye-wateringly high levels of APD.

It is also ignoring 100 MPs who signed a parliamentary petition (EDM 174), and 34 cross-party MPs who spoke at the recent House of Commons debate about the unfairness of this stealth tax.

The Government is disregarding the will of the people by continuing to increase APD, and ignoring widespread calls by MPs for a simple review into what is the highest air passenger tax in the world by far."

ABTA head Mark Tanzer said: "With growth forecasts slashed yet again by the Chancellor, the Government needs to focus every effort on driving growth.

"Tourism is a sector that the Prime Minister has previously outlined as a key growth opportunity and yet once again the Government has announced a rise in APD, strangling the industry’s potential.

"Meeting the Treasury Minister responsible for APD yesterday, I stressed to him the urgent need for a review of the effects of APD on growth and the economy. The tourism sector is ready to employ more people and to offer genuine economic growth but to do this we need the Government to look again at higher and higher levels of Air Passenger Duty and back the whole of our sector – domestic, inbound and outbound."

Luke Pollard, ABTA head of public affairs, added: "The Chancellor is right to prioritise growth in his Autumn Statement, but that intent looks hollow whilst he yet again hikes UK air taxes.

"To further increase the world’s highest aviation tax whilst at the same time refusing to invest in proper modelling of the economic impacts of this tax is very concerning.

"This year, nearly 300,000 people have backed the industry’s call for a review that would show what effects this tax is having on the UK economy’s ability to grow.  Without such an analysis, the Government will only continue to put off foreign tourists, make holidays abroad more expensive and further make UK goods and services less competitive."

While welcoming Osborne’s announcement of billions of pounds of investment in UK road infrastructure, the British Air Transport Association critised the Coalition Government for standing in the way of private investment in new runway capacity.

Chief executive Simon Buck said: "As an island, trading nation, International air links are vital for the UK economy if we are to compete effectively for new overseas business and boost tourism.

"It is shameful that successive Governments have shied away for almost 40 years from taking difficult decisions on permitting privately funded new runway provision in the south east of England where capacity constraints are greatest, resulting in lost business opportunities and jobs to our near Continental rivals who appear to have no such qualms over building new runways.  

"It is essential for the UK’s future competitiveness that new runway capacity is permitted,  to provide for existing and future needs.

"I hope that will be the conclusion of the Davies Commission when it reports in the summer of 2015 and that any such recommendations are implemented by the next Government, of whichever political party, without further delay."

By Linsey McNeill