The UK tourism industry and wider economy will be hit by the next rise in Air Passenger Duty, the chief executive of British Airways’ parent company has warned.
Willie Walsh, the boss of International Airlines Group which also owns Iberia, said that it was wrong to increase APD when airlines are trying to attract business from the rapidly developing economies of India and China.
His latest outburst comes after BA, Virgin Atlantic, Ryanair and easyJet came together to launch the Axe The Tax campaign last month and his address at the Abta Travel Convention in October in which he put the case against APD.
Speaking to Sky News, Walsh said he thought Chancellor George Osborne’s decision to increase APD from next April will put an unfair burden on airlines. This follows big rises in APD in 2007 and 2010, and some airlines believe the increase could be as much as 10% when the details emerge tomorrow.
Walsh said: “The first thing to remember is that it is not a green tax. The government has made that clear. This has nothing to do with the environment. Not a penny of this tax goes to environmental issues.
“Why I believe this is damaging is that it is making the UK uncompetitive. It’s making it expensive to do business here, it is deterring tourists from coming to the UK, it is deterring business people from coming to the UK.
“That’s the message I get when I travel around the world. When I go to India and China, two of the big economies that we want to attract in to the UK, they are telling me that the UK is becoming too expensive.
“They highlight this tax as one of the reasons they believe they can do business better elsewhere.”
Walsh also said he did not think a new airport in the Thames estuary was financially viable as he warned that Heathrow would soon lose its title as the world’s largest airport to Dubai.
His comments came as the Caribbean Hotel & Tourism Association (CHTA) added its voice to industry criticism of the planned April rise in APD.
President Josek Forstmayr said: “Data suggests that APD increases in the past two years have contributed significantly to falling arrivals from the UK, a prime source market for visitors for many Caribbean destinations.”
The Treasury will publish its response to the consultation on APD reform tomorrow.
The document will set out the UK’s view on the representations that have been made by the CHTA, its airline partners, the community in the UK and others.
The CHTA said it will wait until publication of this document before making a full statement.
But Forstmayr said: “Any failure by the British government to address the discriminatory nature of the banding system will be deeply concerning and will justify the strongest possible condemnation by Caribbean governments.”