Abta warns of holiday cost hikes without ‘meaningful’ APD reform

The government is being urged by Abta to make “meaningful reform” of Air Passenger Duty.

And the travel association cautioned against any trade-offs between domestic and international connectivity which could see holiday costs rise.

Abta has written to chancellor Sajid Javid ahead of next month’s Budget welcoming the government’s review of the relationship between APD and regional connectivity as part of a planned rescue package for troubled Flybe.

MoreUK Air Passenger Duty ‘won’t be reduced’

But Abta says the review should be part of a wider reform process, “as the catalyst for constructive discussions between industry and government about a more comprehensive overhaul of the structure of APD”.

The UK has the highest level of international departure taxes in Europe and any further hikes in APD would raise the cost of holidays and send a negative signal to countries the UK is looking to trade with post-Brexit.

Abta highlights in the letter that APD has never been an environmental tax; “it does not incentivise cleaner, greener, practices by airlines or passengers, and the revenue collected does not support the UK’s transition from carbon”.

Association chief executive Mark Tanzer said: “We have today written to the chancellor explaining that APD now needs comprehensive review and reform.

“Any reform in domestic duty at the expense of international duty without a wider review would only serve to undermine the UK’s international competitiveness and cause holiday prices to rise, whilst failing to address pressing environmental priorities.

“Meaningful reform, delivered in partnership with the industry, can maintain the country’s global competitiveness and support the government’s commitment to lead the world on reducing carbon emissions.”

Abta has long called for a fair tax take from the UK travel industry and is sympathetic to the government’s commitment to achieving net zero carbon emissions by 2050 and believes aviation has an important role in helping achieve this.

Tim Alderslade, chief executive of aviation trade body Airlines UK, added: “APD is not an environmental tax, and the UK aviation industry has set out – through the Sustainable Aviation coalition – how it can achieve net zero carbon emissions by 2050, through a combination of measures.

“These include modernising our airspace, introducing and scaling up sustainable aviation fuels, introducing electric flight, and delivering the UN carbon offsetting scheme CORSIA, which will deliver carbon neutral growth in international aviation through to 2035.”

He added: “We remain concerned about calls to use APD specifically to price out new UK routes or deter people from flying from the UK.

“Increasing APD does not benefit the environment, and APD is not the right way to incentivise behaviour.

“Rather, it serves to hamper investment by airlines in new, more environmentally-friendly aircraft and in the development of alternative fuels and technologies.

“Today, most UK airlines operate with very high load factors and modern, fuel efficient fleets. This is at the heart of an airline’s business model, because it is simply uneconomic to fly half empty aircraft, or planes that do not have the best available fuel efficiency.”

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