Keith Williams, CEO of British Airways, explains why Air Passenger Duty is unfairly penalising the UK’s aviation industry.
No one can dispute that the UK and London in particular, has had a fantastic summer.
I’m not talking about the typically unpredictable British weather, but rather the celebrations of our Queen’s Diamond Jubilee and the spectacle that was the London 2012 Olympic and Paralympic Games. These events served to attract visitors from home and abroad to our capital city in their hundreds of thousands. However, many of these visitors would have baulked at the size of the aviation tax they had to pay to depart UK airports,
a deterrent for other potential visitors.
Air Passenger Duty (APD) in the UK is the highest in the world by a significant amount. There are only six other European countries that levy such a tax and the UK’s rates are more than twice the level of the next most expensive tax –levied by Germany.
Currently, a family of four travelling to the Florida from the UK will pay £260 [US$423] in tax before they’ve even had a chance to soak up the sun. And there’s a real danger that this will rise even further in the next budget.
The Government collects £2.5 billion [US$4.06bn] annually from APD, and it wants this to rise to £3.6 billion [US$5.8bn] by 2016. This can only mean that the hard-hit family will have to dig even deeper in order to escape the British weather in the near future.
APD has already increased more than three-fold on many routes in the past six years and
it is confusing and unfair. For example, customers travelling in World Traveller Plus, our premium economy cabin, pay the same as those in First and customers flying to the Caribbean pay more than those flying to Hawaii.
At British Airways we believe that APD is putting UK aviation at a unique and increasing
disadvantage among our competitors. It undermines the UK’s attractiveness as a destination for business and tourism, and imposes barriers for UK businesses to access foreign markets. This is particularly pertinent at a time when the country is in a double-dip recession and the government is seeking ways to stimulate economic growth and attract investment to the country.
At one time, APD was justified by the government as a “green tax” which would dampen demand for air travel and hence reduce carbon emissions. However, aside from the fact that APD revenue is not spent on environmental benefits, the cost to airline passengers is
enough to mitigate aviation’s environmental effects more than twice over. And this was before aviation entered the EU’s Emissions Trading Scheme – which also adds to all European airlines’ cost bases.
We, along with many others from the aviation and tourism industry, have been urging the
government to review APD and reduce the impact of the tax on ordinary travellers and British businesses. We recognise the exceptional difficulty of the country’s fiscal position and we are content to pay our fair share. But the UK airline industry is already the most heavily taxed in the world and any further tax burden will be counterproductive to the country’s economic recovery.
Aviation is, after all, a social and economic good. It gives people opportunities,
keeps families together and broadens horizons.
Excessive taxation puts these benefits at risk.