Minister attacks aircraft tax replacement for APD

A government minister has written to the Treasury criticising plans to replace air passenger duty with a tax on aircraft, a move supported by major travel groups and low-cost carrier EasyJet but opposed by British Airways and other major airlines.

In a letter last month trade minister Digby Jones told Treasury minister Angela Eagle the tax would damage the competitiveness of British industry.

The leak of the letter, revealed in the Sunday Times, follows Travel Weekly’s report of a possible about-turn on the tax change after parliamentary under-secretary for transport Jim Fitzpatrick said: “There are strong arguments that we should not proceed with the transition.” The Treasury subsequently insisted plans for the change are on schedule.

Chancellor Alistair Darling announced the tax switch last November and the Treasury was due to finalise proposals this month for publication in October. The tax is due to replace air passenger duty (APD) from November 2009 and would be levied on all flights – including business jets, transfer passengers and cargo services for the first time.

The Treasury argues an aircraft tax would better reflect the environmental impact of flying. The charter airlines support the proposal because they believe it would cut the tax per passenger on shorter flights. But long-haul airlines believe the change will increase the tax on fares and British Airways fears it will lose traffic via Heathrow if transfer passengers face a tax hike.

Digby Jones is a former director-general of the Confederation of British Industry, which is also lobbying against the aircraft tax. He was appointed as a minister in July last year.

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