A senior minister has hinted the Treasury may retreat on plans to replace Air Passenger Duty with a tax on aircraft.
Parliamentary under-secretary for transport Jim Fitzpatrick told a conference on Wednesday: “Difficulties surround the decision. There are strong arguments that we should not proceed with the transition.”
The Treasury is working on proposals for an aircraft tax to replace APD from November 2009. Final details are supposed to be unveiled in October in time for tour operators to price the tax into their brochures, and provisional details were expected by the end of July.
But the Treasury is way behind schedule and has taken no decisions. Industry sources believe it is already too late for an October announcement.
Any retreat will dismay tour operators and airlines such as easyJet, which lobbied hard for a switch from APD to a tax that would reflect the relative carbon dioxide emissions of aircraft.
Fitzpatrick conceded the government is under pressure from major airlines. He said: “There are very strong arguments from non-charter airlines that the proposals will penalise them.”
He was speaking at the Sustainable Future for Aviation Conference in London. British Airways has lobbied hard against a move from APD.
Speaking at the same conference BA chief executive Willie Walsh criticised Tory leader David Cameron for questioning the case for Heathrow expansion.
Walsh said: “David Cameron appears to agree with those who believe Heathrow transfer passengers contribute little to the economy, but without transfer passengers Heathrow would become a regional airport.”
The BA boss also dismissed a report by business lobby group London First calling for a cut in flights at Heathrow to relieve congestion. Walsh told Travel Weekly: “It’s a pretty poor report and it’s never going to happen.”