The UK airports sector has been campaigning heavily over the past 12 months on the eye-wateringly high levels of Air Passenger Duty (APD) levied in this country. APD - the Government's tax on flights - is currently the highest anywhere in the world, and has risen by between 160% and 360% since 2007. The Chancellor, in his Autumn Statement last year, announced that APD would go up again by the rate of inflation. The Airport Operators Association (AOA) believes he should cancel this planned increase in his Budget statement on 20 March.
APD is regularly cited by AOA member airports as a principle reason why airlines take the decision to reduce flight frequency or cease flying to UK airports altogether. Moreover, research carried out over a number of years has consistently shown that this punitive tax is acting as a brake on the UK's economic recovery, and that it is costing the country in terms of jobs and connectivity. The British Chambers of Commerce, for example, found recently that were APD to increase every year as it did in 2012, over £12 billion in UK economic growth could be lost by 2030. A recent paper published by the World Travel and Tourism Council estimated that APD will cost the UK economy more than 91,000 jobs by 2012.
Increasingly, Parliamentarians from all parties are beginning to acknowledge that when the country's number one priority is encouraging sustainable, long-term, export-led growth, the one thing you should not be doing is making it harder and more expensive for people to fly to and from the UK. This is especially the case when it has become so much easier for passengers to simply hop over the North Sea to travel from Dutch or French airports, thus paying a cheaper rate of APD - or, in the case of Holland, no APD at all! Last year, over 100 MPs publicly backed calls by the A Fair Tax on Flying campaign, a coalition of over 30 leading travel organisations including airports and airlines, of which the AOA is a leading player, for the Treasury to commission an economic impact assessment into APD, so that we can find out exactly how much damage it is doing to the UK's economic recovery.
This week, the crossbench Peer Lord Palmer lent further support to this campaign by leading a well-attended debate on APD in the House of Lords, and putting public pressure on the Government to end what one Peer described as "Treasury obfuscation". Lord Palmer urged the Government to commit to undertaking and committing to initiating a macro-economic review before initiating any further increases in APD - something which the AOA has been pressing for over several years. In total ten members of the Lords spoke during the debate, and all were critical of APD. Lord Howell of Guildford said "APD in its current inflated form is working against our friends, against our foreign policy goals and against the national interest". Lord Lee of Trafford correctly highlighted the fact that a full economic impact assessment of APD has not been carried out for almost 20 years.
Each day more and more people are coming forward and urging the Government to commission an economic study. They are doing so because they recognise that APD is exerting a tremendous downward pressure on the economy. It is making our goods and services more expensive, deterring inward investors from travelling to the UK, and damaging our connectivity to the rest of the world. We urgently need the Government to heed this call, and to announce the impact assessment starting in the Budget on 20 March.