Thursday, 17 November 2011

Aviation heavyweights go on attack over APD

Four of the world's leading airlines have called for the government to scrap Air Passenger Duty over claims that it is more damaging to the economy than the revenues that it provides to the treasury.

In what has been dubbed 'Axe The Tax' campaign the chief executives of Ryanair, IAG, eayJet and Virgin Atlantic publicly signed a ltter to George Osborne, challenging him to conduct an independent review of the economic impact of APD. The main strands to the argument include that the tax is damaging leisure and business tourism, potential jobs and putting of foreign investors.

Commenting on the isse, Willie Walsh said: “This is the probably the first time the chief executives representing Ryanair, Virgin, British Airways and easyJet have ever sat down together and that shows how important this is to us. It's an issue that goes beyond the fierce rivalry that exists between us.  Passengers numbers at UK airports have fallen in the last three years and are now at a lower level than 2004. In 2010, there were 7.4 million fewer passengers using UK airports while numbers using European airports increased by 66.3 million."

Michael O'Leary of Ryanair used an example of a similar tax in the Netherlands in 2008/2009 which was abandoned after 12 months as the £300 million revenue it produced was dwarfed by the £1.2 billion damage that is was estimated to have caused the economy. Similar schemes were alse scrapped in Belgium, Denmark and Norway.

Steve Ridgway of Virgin Atlantic said that a prime example of people being put off the UK can be seen in the 3 million of Chinese vistors who travel to Europe and only 175,000 who travel to the UK. He added that the value of spending by Chinese tourists would far outweigh the revenue received in APD

In the letter the 'Axe The Tax' campaign details how all people will be affected by the tax and not just the wealthy and business people - “For hard-working families, APD is a tax too far for the privilege of taking a well-earned holiday. It is also a tax on tourism and a tax on business. Aviation doesn’t just drive exports - it is a major exporter in its own right with our airlines earning nearly £11 billion of foreign revenues every year. Tourism is one of the UK’s most important earners and is worth £115 million to the UK economy.”

The Chancellor's statement forecast will be made on 29th November and it is expected that APD is to rise from £12 per passenger to £16 per passenger for flights up to 2,000 miles for flights after 1st April 2012.