The Government’s Air Passenger Duty (APD), introduced in 2006, is once again in the headlines for all the wrong reasons. In times of recession the average taxpayer would expect any reasonable Government to encourage consumption. But it is becoming increasingly clear that the Government’s response to the downturn is anything but reasonable. Since 2006, APD for one-way, short-haul flights to Europe has doubled to £10 since 2006 and will increase to £12 by the end of next year; that is a 140 per cent increase in four years. With the Pound being so low against both the Dollar and Euro, a reduction in APD would help entice more visitors to the U.K, boosting exports in the process. Calls for reducing or abolishing APD are especially pertinent given that its continuance is stoking an exodus of airline operators.
Ryanair, Europe’s largest airline, has today announced that it is to cut flights from UK airports. These cuts, which amount to a 40 per cent reduction in capacity, are most likely to fall on London Stansted. Michael O’Leary, Ryanair’s Chief Executive, said the move was a protest at plans to increase Air Passenger Duty on short flights and at the refusal of BAA, now owned by Ferrovial, to cut landing fees (also increased from £2.80 to £6.53 in 2006). Mr. O’Leary said that these tourist taxes are both “insane and damaging”, and the Government would do best in following the example set by their counterparts in Belgium, Greece and Spain in either scrapping or reducing APD and landing fees.
The TPA’s opposition to Air Passenger Duty is well documented. As we have said, the continued rise of APD is, ironically, likely to increase total emissions from air travel. This is due to the incentives provided by the scheme, which encourage airline operators to allocate more resources to long-haul flights. This runs counter to the Government’s intentions to decrease CO2 emissions. It is clear that Air Passenger Duty is functioning not as a green tax but as another device to raise revenue. All that is achieved in hiking the cost of air travel is a reduction in flights of budget airline. This ultimately hits those for whom budget airlines have made flying affordable for the first time.