The Fair Tax on Flying campaign has backed a call by the Institute of Directors for a comprehensive analysis of Air Passenger Duty by the government.
The review should be conducted to discover whether the tax has a net negative effect on growth and employment.
The IoD’s ‘Flying to the Future’ report says that “If APD is as damaging in the UK as it was in the Netherlands, it could be costing the British economy £12 billion a year”.
Abta head of public affairs Luke Pollard said: “We welcome this powerful recommendation from the IoD.
“The UK’s APD is the highest air passenger tax anywhere in the world, so it is crucial that the government undertakes a full impact-assessment to determine just how much damage it is having.
“With more than 100 MPs calling for an impact assessment, as well as a cross-party group of MPs, 200,000 constituents and now the Institute of Directors – the pressure on the Treasury to commission a review simply won’t go away.”
APD is set to rise again next April.
The Airport Operators Association also backed the IoD report which warns that APD could be costing the UK economy up to £12 billion a year.
Chief executive Darren Caplan said: “This report adds further weight to the ever-growing argument that Air Passenger Duty in the UK is far too high, and is doing lasting damage to the country’s economic prospects.
“The Airport Operators Association has been calling on the government to recognise what airports, airlines, the travel industry, business leaders and more than 300,000 people who have contacted the Chancellor of the Exchequer and their local MPs about this issue have been telling them for a long time.
“APD is actively hurting the UK airports sector, and costing the country in terms of connectivity, passenger numbers and inward investment.
“We strongly urge the government to put an end to the punitive rises in APD and commit to carrying out an independent economic impact assessment into the true cost of APD on the whole of the UK economy.”
The IoD is calling for APD to be frozen in cash terms as a first step, as reported by Travel Weekly yesterday.
Now that aviation has come under the EU Emissions Trading Scheme, APD should be offset against costs from the ETS, so that the overall tax on flying is not increased.
The Government should undertake a comprehensive analysis of APD and the ETS.
The report says: “This tax is not just high, it is out of keeping with the international direction of travel. Only six of the 27 EU states have an air passenger tax, and several, including Ireland, the Netherlands and Denmark, have recently reduced or abolished their tax due to the damaging economic effects.
“The Netherlands found that their air passenger tax generated revenue of €300 million but cost the wider Dutch economy €1.3 billion. If APD has a comparable damaging effect on the UK economy, that would mean it costs Britain £12 billion a year.”
Corin Taylor, the IoD’s senior economic adviser and author of the report said: “British aviation faces several key crunches which require swift, co-ordinated action.
“Aviation is economically crucial, and the world is only going to become even more interconnected.
“We cannot afford to ignore the reality that demand for air travel in the southeast will soon be more than our airports can handle. This means airport capacity must expand, alongside other measures to improve our competitiveness in terms of taxes and immigration processes.
“An aviation strategy is not just about laying new tarmac. Runways, transport links, noise and air pollution, tax on flights and the visa system must all be considered together if the UK is to make the most of the huge potential of aviation.
“The world economy is shifting towards high-growth economies, including the Bric nations: it is absolutely vital that we have an aviation strategy which embraces the enormous opportunities this brings.”