LAST Tuesday’s budget by the chancellor gets our qualified approval. It made a number of very welcome policy recommendations but doesn’t go as far as we had hoped towards making Air Passenger Duty a percentage of the fare paid.
The Treasury’s proposal to tax business-class travel at a higher rate is welcome because, for the first time, it reflects the straightforward principle that APD should be related to the ability to pay.
There will probably be a few murmurs of discontent over this but, in reality, it’s just common sense.
The principle of taxing the fat-cat businessman paying £800 to fly to Nice and the poor student paying £100 at exactly the same flat-rate was at the heart of the EasyJet complaint.
Business-class tickets are generally paid for by companies and the new level of tax still represents a very small proportion of an average business-class fare.
Additionally, the reduction of tax on economy fares to £5 will be appreciated both by passengers and airlines alike.
We’ll pass this saving on to the customer immediately upon implementation and it should help encourage low-cost airlines to introduce more services to Europe.
We are still concerned that tax for travel in the UK will remain at £10 (£5 for each leg) hence our continued desire to see tax applied as a percentage of the overall fare. I appreciate that it is the principle of the single market that necessitated this approach but at the same time, it still flies in the face of common sense that someone going to Dublin and back from London should pay £5 while going to Aberdeen or Liverpool and back should pay £10.
Had the tax been a percentage of the round-trip fare, assessed at the airline level as it is already, the anomaly would have been corrected.
While we will continue to campaign for tax to become a percentage there is an important issue that is central to EasyJet and hundreds of thousands of its customers.
It was not entirely clear from the chancellor’s speech whether air travel to the Highlands and Islands will be exempt from tax, as well as travel from the region.
If the exemption does include flights to the region, that could make the difference to EasyJet increasing its daily services from Luton to Inverness to thrice daily, which in turn could give a huge boost to business and tourism in that deserving part of the UK.
On balance, the chancellor actually did not go all the way in making the APD a percentage of the fare, which would have been the fairest and most logical thing to do.
However, he has made in-roads into improving matters.