Member Article

Aviation tax rockets to £2.7 billion

Airport passenger duty has nearly doubled to an approximate £2.7 billion total costs for airline in the last decade, and rates will continue to rise.

This is according to a report from PricewaterhouseCoopers for 2012/11 which shows that aviation tax burdens in the UK are the heaviest in Europe as they stand between £13 and £184, compared with German taxes on tickets equivalent to prices between £6 and £33.

Analysis of airport passenger duty receipts in the Netherlands introduced in 2008 soon resulted in the withdrawal of the tax, after a substantial reduction in air traffic.

PwC suggested that the UK Government did not have a broad global outlook when it comes to the wider economic impact of locally imposed restrictions and taxes on airlines.

This weekend some of the UK’s main airlines reportedly joined together in a call for PwC to investigate the economic impact of these taxes.

Budget airlines Ryanair and easyJet rallied alongside Virgin Atlantic and British Airways owner IAG in a call to axe the hated aviation tax.

A joint statement in March saw the four airlines heavily criticise the Government for their “blinkered insistence” on an unreasonable tax.

After raising the duty on air travel this year by 8%, the airlines said: “At a time when the Government talks about creating jobs and growth, its blinkered insistence on further increases in Air Passenger Duty achieves precisely the opposite.

“Youth unemployment is at record levels. Inbound tourism is a major employer of young people, but international visitors are being turned off the UK because of the exorbitant level of APD - which is by far the highest air travel tax in the world.

“In every other leading country, aviation is an expanding industry that underpins and facilitates growth in other parts of the economy. In the UK, rises of up to 360 per cent in APD in the last seven years are squeezing the life out of the economy. The CAA has confirmed that UK passenger numbers last year were the same as in 2004.

“Yet again, the Treasury is pressing ahead with further rises without any analysis of their effect on the wider economy. In the absence of such a study, we must assume that the Treasury knows it cannot justify this job-destroying tax in overall economic terms. APD must be scrapped.”

PwC said that planning of the report is in its preliminary stages and cannot yet supply any further information regarding the investigation.

This was posted in Bdaily's Members' News section by Miranda Dobson .