The Federation of Tour Operators will pursue the Government in the High Court over Air Passenger Duty, arguing the tax is unlawful.
FTO director-general Andy Cooper said he was left with no alternative after an unsatisfactory Treasury reply to a letter seeking compensation for tour operators which have paid £45 million in APD on bookings made before this month’s increase was announced.
He will file papers seeking a Judicial Review and expects a hearing in nine months, unless the case is referred to the European Court of Justice, which would take longer.
Cooper said: “APD is an illegal tax under the Chicago Convention of 1944.”
This set the parameters for post-war air travel and bans tax on aviation fuel. The signatories also agreed not to impose entry or exit taxes on flights except for a specific purpose.
Cooper said: “APD is purely a revenue-raising measure. It is not for a specified purpose.”
The Treasury refutes that, arguing the increase will benefit the environment, although it has failed to give details. It may also argue the convention is not part of UK law. However, FTO lawyers believe the relevant article applies to the UK after being incorporated by a European directive in 2004.
A defeat for the FTO might give a green light to other taxes on air travel, and challenging a tax the Government insists will benefit the environment risks adverse publicity.
The FTO plans to pre-empt the latter with a statement to the consumer press. Cooper said: “APD is not an environmental tax and it is not for any environmental purpose.”
The action is likely to cost the FTO £500,000 to £1 million.
- ABTA is investigating whether tour operator Olympic Holidays is in breach of the Package Travel Regulations by asking agents to collect unpaid Air Passenger Duty from customers.