UK to go ahead with air tax rises

UK air travel "most heavily taxed" - BA

Airlines today (April 22) reacted strongly to the failure of the British Budget to stop propose a rise in the Air Passenger Duty (APD).

Alistair Darling, the UK Chancellor Exchequer, made no mention of the controversial tax in his Budget speech today despite intensive lobbying by the travel industry to scrap the increase.

The rise is due to come into effect in November.

Alistair Darling

The APD increases will see passengers charged more per segment, with four tax bands depending on destination. Further increases are planned for 2010.

The airline industry had called for the increases, announced last November as part of Mr Darling's "recession package", to be scrapped along with a proposed Aviation Duty.

But today's announcement has angered many carriers including British Airways and Virgin Atlantic.

BA's ceo Willie Walsh condemned APD claiming it would penalise working families, harm economic recovery and put the UK at a competitive disadvantage.

"We are disappointed that the Government has not revised its planned increases in the light of the economic downturn," said a spokesperson for BA.

"The aviation industry is facing an extremely difficult trading environment.  An increase in tax rates of up to 112% will further impact declining trends in passenger numbers."

BA said it would increase its campaign against APD when the European Emissions Trading Scheme (ETS) is introduced in 2012, claiming that government figures already show UK airlines are meeting environmental costs.

Virgin's communications director Paul Charles told ABTN he was unsurprised by today's announcement, but called on the government to justify APD in its current form before introducing rises.

"Sustainability is at the forefront of everything we do, and we'd certainly like to see where the money from APD is actually going, to benefit the environment," said Mr Charles.

Paul Charles

"We'd be delighted to see the projects that APD money is going towards. Everyone knows it's a back door increase and I think passengers resent paying it."

Mr Charles said it was time to reconsider APD, a tax that could lead to thousands of job losses as increased prices affect demand.

He added: "Already we have concerns about the nature of the scheme anyway in terms of the banding proposals, for example affecting the Caribbean when they shouldn't, so we would urge that the whole scheme is reconsidered, and the rises as well."

easyJet's director of communications Toby Nicol said Mr Darling had "missed the opportunity to give air passengers a much-deserved shot in the arm by refusing to ditch his planned £1 billion raid on the airline industry."

"Last year the Chancellor bottled the planned reform of Air Passenger Duty which would have made it a fairer, greener tax and instead simply announced a huge tax raid on hard-working families while continuing to exempt private jets and cargo planes," he said.

"In today's Budget he should have waived the planned increases in order to help an industry which will be at the forefront of dragging the economy out of recession, but he bottled that as well."

Ryanair, Europe's largest low cost carrier ahead of easyJet, highlighted the affect of an APD on the UK and Ireland tourist industries.

"UK tourism is in the toilet due to Gordon Brown's greedy tourist tax," said a Ryanair spokesperson.

"The UK and Ireland are now the only countries who refuse to acknowledge that taxing tourists is bad for the tourism industry and will continue to see passenger traffic deteriorate until such taxes are removed."

Flybe said it had reacted with "extreme disappointment" to failure of Mr Darling, a former transport minister, to postpone the APD rises.

"As a former Transport Minister, Mr Darling knows that aviation will play its part in dragging the country out of recession," said Mike Rutter, Flybe's chief commercial officer.

"The government's own figures show that aviation already pays its own way. By slapping another tax on a British success story like aviation, the Chancellor runs the risk of endangering a recovery that could be led by aviation."

Willie Walsh

The Board of Airline Representatives in the UK (BAR UK) Ltd, which represents more than 90 scheduled airlines, said it was angered and disappointed by the go ahead.

Mike Carrivick, its ceo, said: "These proposals, which have already been contested by BAR UK and most other segments of the travel industry, are both excessive and ill-timed.

"Current revenues generated by APD charges already exceed the cost of aviation emissions.

Increasing APD is simply a revenue generating opportunity imposed on an industry that is facing a major economic crisis." 

www.ba.com   www.virgin-atlantic.com   www.easyjet.com    www.ryanair.com   www.flybe.com