Industry leaders are threaten ing an increasingly vocal campaign against Air Passenger Duty (APD) amid rising anger at the government.
British Airways (BA) chief executive Willie Walsh warned the tax rises could cost the economy “billions”, while travel management company Carlson Wagonlit Travel (CWT) forecast the extra APD would cost its clients £9 million a year.
UK Board of Airline Representatives (BAR UK) chief executive Mike Carrivick summed up the industry-wide frustration, saying: “The government has made very clear it has no intention of changing.”
APD will increase from November 1 and switch to a four-band system based roughly on the distance from London to a destination’s capital.
The £40 duty on long-haul economy fares rises to £45 to the US, £50 to the Caribbean and £55 to Singapore. APD on short-haul flights will increase by £1 to £11.
However, it is the further increases planned next November – to £60 to the US, £75 to the Caribbean and £85 beyond – that has united the industry in opposition.
There is fury at a banding system that imposes more tax on a flight to the Caribbean than to the US West Coast or Hawaii, and at the double rate of tax on premium economy seats – the same as on business and first class.
Walsh said: “There is no justification for the rises next year. We will be increasing our campaign. We have been campaigning quietly with the Treasury. The next stage will be much more vocal.”
He declined to give details of an impact assessment BA has passed to the Treasury, but said: “There will be billions lost to the UK economy.
An increase of up to 112% in APD will have a negative impact on our business and on doing business in the UK.”
ABTA warned the increases will force airlines to pull out of regional airports, and repeated its call for a government rethink. The association has been co-ordinating the industry’s anti-APD campaign since the summer.
BAR UK has written to all 156 national Olympic Committees outside Europe, inviting them to express concern about the increase in costs ahead of London 2012.
Carrivick said: “We are just as worried about inbound travel as outbound. The UK is imposing the highest rates of taxation in the world.”
BAR UK is also unconvinced a change of government will bring a policy change, despite the Conservatives suggesting they would replace APD with a tax on aircraft. Carrivick said: “APD is not top of their agenda.”
Representatives of Caribbean governments continue to lobby ministers amid concern at the impact of the heavy APD increase on flights to the region.
However, there is disagreement within the alliance against the tax hike. Walsh revealed BA has no plans to mirror threats by TUI Travel to remove heavily taxed, premium economy seats from its aircraft.
He said: “We are not thinking about taking out our World Traveller Plus seats.”
Companies and industry bodies are urging people to sign an online petition demanding a government rethink, go to http://petitions.number10.gov.uk/APDIncrease/ to show your support
APD at a glance
APD increases on November 1 and will apply in four bands, based on distance from London to a destination’s capital. Rates double on premium economy, business and first-class tickets. The economy rates are:
- Band A – to 2,000 miles (short haul), £11 (up from £10)
- Band B – to 4,000 miles (including the US), £45 (from £40)
- Band C – to 6,000 miles (including the Caribbean), £50 (from £40)
- Band D – more than 6,000 miles (including Singapore), £55 (from £40)
APD will rise again in November 2010, when rates will be: Short haul (Band A) £12; the US (Band B) £60; Caribbean (Band C) £75; and Singapore (Band D) £85.