We, the undersigned, are puzzled as well as disappointed that the government plans a double-inflation increase in Air Passenger Duty (APD) this year. In his Autumn Statement the Chancellor said the government aspires to having the “most competitive tax regime in the G20” and that “we shouldn't price British business out of the world economy”. Yet he has increased the tax on flying to a level unparalleled anywhere else in the world.
The small-print in the Autumn Statement confirms that there will be both a huge increase in APD and that there are no plans to offset the cost of the new Emissions Trading Scheme for passengers. This means there will be a double tax increase for passengers this year. It goes against common-sense, economic logic and continues the tax discrimination against air travellers. It is a decision that is short-sighted and ill-considered and will place the UK at an even greater competitive disadvantage. For a government that has, quite rightly, made the economy its number one priority this decision defies reason.
We call on the Chancellor to urgently commission an independent study of APD's overall economic value. To have made this decision without undertaking a comprehensive economic assessment seems to be at odds with the Treasury when it says that it seeks evidence-based solutions to taxation issues. British businesses have been telling the government that APD is costing jobs and growth: we strongly believe that an independent economic assessment would confirm that the negative impact of APD on UK GDP significantly outweighs its revenue benefit for the Treasury. Indeed, a British Chambers of Commerce report recently concluded that the government’s planned APD increases could cost the British economy £100 billion by 2030, and cost 25,000 jobs in the next five years alone.
There are many reasons that APD is so destructive. Britain is losing out on billions of pounds of inbound tourism because foreign travellers are opting to avoid the UK’s high flight taxes. Foreign businesses are being taxed an estimated £300m each year just to do business on British soil and our own businesses suffer the additional tax burden just to fly overseas. Families have to fork out hundreds of pounds to go abroad on their annual holiday and survey after survey shows that airlines and airports are losing routes to European rivals because of the UK’s exorbitant APD. We also know that passengers using British airports are in sharp decline. According to the Civil Aviation Authority passenger numbers travelling by air have declined from 240m to 210m between 2007-2010. It is no coincidence that over the same period APD increased by between 140% for short haul flights and 325% for long haul flights.
Until recognition is given to the immense value derived to the UK economy from air travel, and a more equitable tax regime is established, APD will continue to inflict economic damage to the industry and the UK economy. We strongly urge the Chancellor to scrap the planned APD increases in his Budget, as a prelude to abolition of this tax.
Ian Doubtfire, Managing Director, Jet2.com
Jim French, Chairman and Chief Executive, Flybe
Kevin George, Managing Director, Monarch Airline
Carolyn McCall, CEO, easyJet
Wolfgang Prock-Schauer, CEO, bmi
Steve Ridgway, CEO, Virgin Atlantic Airways
Keith Williams, CEO of British Airways
Gabriela Bordea, CEO, TAROM Romanian Air Transport
Rob Fyfe, CEO Air New Zealand
James Hogan, President & CEO, Etihad Airways
Birkir Holm Gudnason CEO Icelandair
Thomas W Horton – Chairman & CEO American Airlines
Shinichiro Ito, President & CEO, All Nippon Airways Co. Ltd
Nikos Kardassis, CEO, Jet Airways
Capt. Hossam Kamal– Chairman EGYPTAIR Holding Company
Wolf Meyer, CFO, South African Airways
Masaru Onishi – President and COO, Japan Airlines
Ian Ailles, Chief Executive, UK Mainstream Businesses, Thomas Cook Group
Roger Allard, Chairman, All Leisure Group
David Burling, Managing Director, TUI UK & Ireland
David Dingle, CEO, Carnival UK
John McEwan, CEO, Advantage Travel Centres
Hugh Morgan, Managing Director Cosmos
Andy Perrin, CEO, Hotelplan UK
Rupert Thomson, Light Blue Travel Ltd
Amanda Wills, Managing Director, Virgin Holidays
Denis Wormwell, Chief Executive, Shearings Holidays
Jim McAuslan, General Secretary, BALPA
Len McCluskey, General Secretary, Unite