Air Passenger Duty (APD) should be set according to the government’s revenue needs and is not a green tax, according to a House of Commons Transport Committee report published today.
The Future of Aviation Volume One said: “The aviation sector should be contributing its fair share to government revenues. APD was introduced to raise revenue for the government. It has been modified to provide ‘green signals’, but it is not an environmental charge.”
However, MPs on the committee also said the industry’s economic importance in the recession and competition from other European airports needed to be taken into account when levying taxes against the industry. They want to know how much the aviation industry contributed to the Treasury, the extent of any tax exemptions and how these compare to the social and environmental costs of aviation.
MPs also called for the ATOL levy to be increased to cover all overseas flights and not just package holidays.
Government should work with the insurance industry to make it clear to passengers that standard travel insurance does not normally include flights home when an airline fails, it added.
On airport expansion, a third runway at Heathrow should go ahead, the report said, but it sought assurances that it would be linked to other airports via a high-speed rail link. If the government followed the committee’s recommendations, Gatwick – rather than Stansted – could get approval for a third runway.
Delays in reaching a final decision on Stansted, coupled with the recession and declining passenger numbers, meant a second runway at Stansted was unlikely to be completed before restrictions on an extra runway at Gatwick expired in 2019. The recommendation followed last Friday’s agreement by BAA to sell Gatwick to Global Infrastructure Partners for a reported £1.51 billion.
Evidence supporting the report is due to be published on December 11.