Twelve months ago, a broad cross-section of airport, airline and tourism organisations formed a coalition to campaign on Air Passenger Duty (APD).
It was called ‘A Fair Tax on Flying’, and its purpose was to draw attention to the fact that the UK has the highest APD in the world, which has risen rapidly in recent years; that APD is set to go up even further in future; and that something now needed to be done about it!
In the four years between 2007 to 2011, APD increased by an astonishing 140% and 325% for long-haul and short haul flights respectively. Whilst accepting that aviation should play its part in helping to reduce the UK’s deficit, pay off debt and cover its environmental impact – which it does – one has to ask if there is any other sector out there that has seen such a rapid tax increase in such a short space of time.
The amount of APD collected by the Treasury is set to increase by an anticipated 55% over the next three years, with a double inflation increase planned at next month’s Budget – yet aviation is supposed to be a sector which the Government, only last November, said was crucial infrastructure to the overall success of UK plc.
It gets worse. Standard & Poor’s analysis into the effect of aviation joining the EU Emissions Trading Scheme (ETS) showed that by the end of the decade ETS would – on a conservative estimate – cost €40 (£35) per passenger. Currently a family of four pays £240 to fly to New York from the UK, but just £14.50 from France.
Unless APD is phased out to accommodate ETS, that UK family will soon be paying over £300 APD by 2020 and €160 (£135) in ETS tax, totaling over £400 for a one-way trip to the United States.
Is it any wonder that the World Economic Forum’s 2011 international competitiveness study shows the UK now ranks 135 out of 139 countries in terms of taxation on tourists; that overall air passenger numbers in the UK are flat-lining; and that airlines such as Air Asia X cite APD and EU ETS as reasons not to fly here now or in the future.
It is for these reasons that the industry united, to speak with one voice in calling for a freeze on APD. Last year, a single-day campaign involving airlines and airports saw over 17,500 people write to their MP to oppose aviation tax rises.
More than 50 Parliamentarians wrote to the Chancellor recently to tell him to oppose further rises to this stealth tax. And high impact consumer PR initiatives – driven in large part by the campaign and our members’ activities – have seen public awareness of APD rise considerably, with prominent coverage in print, broadcast and online media.
The Treasury has begun to recognise the folly of its APD rises. Following concerted PR activity ahead of last years’ Budget, APD was ‘frozen’ for a year. And last autumn, the Chancellor agreed to devolve APD-setting powers to the Northern Ireland Assembly to prevent Belfast losing out to Dublin (which has much lower APD) on a key transatlantic route.
However, despite seemingly accepting APD’s negative impacts the Treasury still intends to levy that ‘double inflation’ increase in next month’s Budget, at the same time as the EU ETS ‘double taxation’ takes effect. Has it not dawned on the Treasury that if more people fly due to lower APD, this will ensure the desired Treasury aviation tax take is maintained whilst benefiting travellers, businesses and the economy at large?
So although the first 12 months of FTOF have had some successes, it is clear we need to raise our game for the year ahead. We need more organisations joining the campaign, more robust evidence for the Treasury on the harm APD does the economy, and more UK travellers (ergo voters) demonstrating their opposition to current and future eye-wateringly high levels of aviation tax.
The FToF campaign will continue to make the case in Westminster, Whitehall and in the media in seeking to prevent further APD rises, and in demonstrating the breadth of opposition to this iniquitous tax. If your organisation would like to join, please find more information at www.facebook.com/afairtaxonflying. Only by working and acting together, can we deliver a Fair Tax on Flying.
Darren Caplan is chief executive of the Airport Operators Association