It's the season for political leaders to address their party faithful. And while today the media's sights were trained firmly on the Prime Minister's speech and its aftermath in Manchester, it's worth mentioning another global leader who also addressed a crowded conference hall this week. Yesterday the CEO of (one of) the world's largest airline carriers - the International Airline Group (it owns British Airways and Iberia) - made some powerful and candid remarks at the annual ABTA Travel Convention in Mallorca. Remarks that the MPs who listened to the Prime Minister today in the Manchester Central Convention Complex would do well to dwell upon.
In a Q&A session, Mr Walsh made the strongest calls yet for a relief for the aviation industry from what he described the 'flying poll tax' - Air Passenger Duty. He called on the Government to properly assess the full negative effect that APD is having on the UK's economy and to look past its rigid focus with deficit reduction to see how APD is hurting the economy. He went on to say that the Government "must get weaned off the revenue raised by the Flying Poll Tax" stating that "APD is having a hugely negative impact on the economy."
That Willie Walsh that is so vexed about APD should worry us all. And not just because, as passengers, APD means higher fares on our holidays or business trips. Yes, it's true that for passengers the costs are huge. A typical British family of four travelling in economy class pays £240 more than most European countries to fly to the USA and almost £50 more to fly to Europe. But it is also the detrimental economic impact that APD is having that is so damaging. At a time when politicians are searching for ways to stimulate economic growth they'd do well to look at ways to make the UK more competitive by removing the high costs that aviation tax places on air travel to Britain - a tax that is the highest in the world. High aviation taxes is not a recipe for growth - it is a constraint on growth. Mr Walsh argued that a lower, fairer tax on flying would deliver substantial benefits for the UK economy and for the Treasury and he is not wrong.
APD not only affects air travellers, it acts as an obstacle for the entire economy as it makes international trade harder. Britain isn't alone in having a flirtation with flight taxes. But we are alone in hiking them year after year after year to a point where it severely damages our economy. In fact, the Netherlands scrapped their version of APD recently having seen less than expected revenue streams. The tax actually cost the Dutch economy four times more than the revenue it raised. Four times! No wonder the Dutch scrapped their flight tax when they saw the damage to their economy it was producing. Similarly, in the UK, APD´s negative impact is already being seen: there has been a reduction in passenger numbers in the UK of 7.4 million in 2010 against a 4% growth in the rest of Europe. Mr Walsh said that the Government cannot say that the loss of 7.4m passengers "was ok". He's right. And the reason? The UK's top - or 'Standard' rate - of Air Passenger Duty is some 8.5 times the average of other countries in Europe which still levy a charge.
Not content with having the highest tax in the world already, the Government intends to raise APD by twice the level of inflation in April 2012, having postponed an increase in April 2011. The postponement was a welcome move but a double-hit - that equates to 10% increase in tax is not the remedy for a sick economy. What's more the European Union intends to introduce an Emission Trading Scheme for aviation in 2012, revenue from which will go directly to the Treasury. This will add more costs to flying. Mr Walsh was right when he said aviation should pay its environmental cost but simply loading more taxes on more taxes is going to help create more jobs in Britain nor will it help families struggling with their finances afford a holiday.
Since 2007 passenger numbers departing the UK have fallen by 22%. It is no wonder that Willie Walsh is so vexed. The MPs returning home from Manchester today may well do well to think about Mr Walsh's words as they wrestle with the best ways to deal with slow economic growth.