Airlines call for Air Passenger Duty to be scrapped

Dominic Lipinski /PA

In a rare show of unity, British Airways, Easyjet, Ryanair and Virgin Atlantic are together calling on the UK government to scrap Air Passenger Duty (APD).

The tax, which was introduced in 1994, is applied to almost every ticket on a flight originating in the UK, and has risen sharply from between £5 and £40 per ticket to between £24 and £170.

Discouraging air travel

The four airlines argue that the tax penalises British holidaymakers and discourages foreigners from visiting the UK for both business and travel. They have called on Chancellor George Osbourne to set up an independent review of APD.

The government however argues that it has frozen APD this year, and that unlike many other countries, the UK does not levy VAT on flights.

The amount passengers have to pay varies according to which class they travel in, and whether their flight is short or long-haul. Concerns over whether scrapping this tax would increase airline profits were dispelled by Ryanair chief Michael O'Leary.

He told the BBC that removing APD "has nothing to do with our profits. It is paid by families, paid by passengers going on holidays. If it is scrapped, the money goes straight back into families' pockets."

Damage done by APD

Mr O'Leary also said that APD has resulted in 30 million fewer overseas visitors coming to the UK in the past five years, and added that with the new Emissions Trading Scheme tax being introduced in January 2012, UK passengers will be "taxed on the double".
Willie Walsh, chief executive of International Airlines Group, which owns British Airways, told the BBC that APD is "hugely damaging and must be scrapped. We challenge the chancellor to undertake an independent review, which will show that the net effect of this tax is damaging" he said.
Despite freezing APD this year, the government is expected to increase the tax by 10% next year. It is seen as a valuable revenue raiser and is expected to generate around £2 billion this year.

The airlines argue that since it was originally introduced to combat greenhouse gas emissions, it should be scrapped next year with the introduction of the EU's Emission Trading Scheme.
A Treasury spokesman said: "We consulted on a range of reforms to APD, including simplifying the tax and making it fairer by extending APD to private jets. We will say more on this in the coming weeks."
At the start of this month APD was reduced for direct long-haul flights from Northern Ireland, in response to competition from services in the Irish Republic, which has an Air Travel Tax of just three euros to any destination.
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