Heathrow is calling for air taxes to be scrapped on UK domestic flights to stimulate growth.
Passengers paid £225 million more in taxes on domestic flights compared with peers in other parts of Europe, according to the London hub.
The airport has written to chancellor Philip Hammond calling for Air Passenger Duty to be dropped on domestic flights to increase the number of routes, The Times reported.
The intervention comes ahead of the Budget on November 22. The proposal is part of a new nine-point ‘Bringing Britain Closer’ plan unveiled by Heathrow today.
This includes “practical, deliverable and binding plans” to connect more of the UK to global growth and prepare the economy outside London for Brexit, the airport claims.
Measures include:
1. Introduced £10 discount on domestic flights
2. Committed to £10 million route development fund
3. Campaigning for the abolition of domestic APD
4. Supporting the ring-fencing of slots for domestic routes
5. Supporting public service obligation routes to Heathrow
6. Connecting to the largest 100 towns and cities
7. Supporting Western Rail Link and Southern Rail access
8. Improving connections to London
9. Working with HS2 to connect passengers to the north
Taxes on a return domestic flight from Heathrow are currently £26. Abolishing them would save UK passengers at least £24 million a year at Heathrow alone, while stimulating an 8% increase in demand which would make many new domestic connections commercially viable for airlines.
Heathrow has just eight domestic routes and earlier this year cut its domestic passenger charges by third to improve route economics and boost connectivity.
Abolishing domestic APD is the next step to helping Heathrow reach its goal of connecting to at least 14 UK destinations once expanded – including the potential for new flights to Liverpool, Humberside and Newquay.
Research from independent economics consultancy Frontier Economics shows that removing APD on all domestic flights would save UK passengers up to £225 million a year and boost the country’s overall GDP by boosting connectivity between regions.
The increased tax receipts from this growth is likely to mean that the impact of abolishing APD on domestic flights is revenue-neutral for the Treasury.
Heathrow chief executive John Holland-Kaye said: “Preparing for a post-Brexit economy means this Budget must include practical, deliverable and binding plans to support all of the UK.
“With an ambitious new nine-point connectivity plan, Heathrow is doing its part to connect all of Britain to growth – it’s now time for the government to act.
“Abolishing Air Passenger Duty on domestic flights is a bold move that would supercharge British competitiveness, make it cheaper for British businesses to get to London and beyond and ensure every part of our country can prosper in the future.”
Christine Ourmières-Widener, chief executive of Flybe, which started flights between Heathrow and Scotland earlier this year, said: “Flybe welcomes and supports Heathrow airport’s campaign to scrap Air Passenger Duty on all domestic flights across the UK.
“Removing APD on domestic flights would help drive UK economic development and mobility, but more importantly would bring down the cost of air travel for the everyday travelling public.
“As a leading provider of UK regional services and an operator into Heathrow, many of our passengers feel the financial pain of the level of APD levied on domestic flights. At worst, APD can account for as much as 50% of a total ticket price when based on Flybe’s lowest fare.”
Liverpool John Lennon airport strategy director Mark Povall added: “An expanded Heathrow would offer the opportunity for unserved UK airports such as Liverpool to have access to the UK’s hub airport for improved worldwide connectivity and to further grow their networks, something that is crucial for generating growth across the whole country, not just London and the south-east.
“However, APD remains a barrier to airline growth here in the UK and will undermine the viability of such domestic connections.
“We naturally support Heathrow’s efforts to lobby for change and scrap Air Passenger Duty going forward.”
Leeds Bradford airport chief executive David Laws said: “Connecting passengers from Yorkshire with the rest of the UK is an important part of our operation.
“By cutting APD on all UK domestic routes, it would be easier and more affordable for businesses and tourists to move through our airport and access our region; boosting jobs and growth in the process.
“We support this cut and the benefits it would bring to communities and businesses across Yorkshire.”