Government Has Ignored the Voice of Aviation For Too Long

You know when the Chief Executives of rival airlines Ryanair, British Airways, Virgin Atlantic and EasyJet agree to share a platform that there must be a very good reason for it.

You know when the Chief Executives of rival airlines Ryanair, British Airways, Virgin Atlantic and easyJet agree to share a platform that there must be a very good reason for it.

Their demands today for the government to scrap Air Passenger Duty are a determined effort to change the mind of treasury ministers little more than a week ahead of Chancellor's autumn statement, when an announcement is expected on further increases to aviation tax.

It is a sign of just how vexed the aviation and tourism industry is about the controversial issue of flight taxes. The truth is that this coalition, and my own Labour Party before it, failed to heed the warnings of the airline bosses about the danger of over-taxing passengers and what higher taxes means for British businesses and holidaymakers. Those chickens are now coming home to roost.

As you'd expect, the airline bosses today gave a strong defence of passengers on the airwaves this morning - after all a family four already pays £240 taxes to fly to Florida - a sum that is likely to rise to well over £300 by the end of this Parliament. It's no wonder that data released today shows that 77% of people believe that APD is unfair and 80% would like to see it scrapped.

But perhaps more tellingly, 85% believe that aviation is important to the recovery of the UK's economy. It is this economic argument that is so compelling and the reason why I am now a firm opponent of Air Passenger Duty (APD).

Passenger numbers at British airports have now fallen to a level lower than in 2004. As the airline bosses pointed out today, "last year the UK recorded the highest traffic loss in absolute terms, 7.4 million passengers, while traffic at European airports grew by 66.3 million passengers." Of course the downturn in passenger numbers has a direct impact on jobs and employment in and around those airports. But the far less fashionable - and rarely heard - argument to make is the damage APD has on inbound tourism.

You may recall that a few months ago the PM launched the 'GREAT' campaign - an attempt to attract what he hopes will be millions of additional visitors to the UK, increasing inbound tourism by £2bn over the next four years.

I'm afraid I have news for David Cameron: a slick marketing campaign by a slick Prime Minister who is rather too fond of his stunts and press opportunities goes will go nowhere near close enough to encouraging the kind of levels of inbound tourism that are needed to deliver significant economic growth.

Consider one of the world's fastest growing outbound tourism markets: China. Since 2000, Chinese outbound tourism expenditure has risen by over 400%. However, visitor expenditure in the UK from China has increased by only 125% over the same period, meaning that the UK is significantly underperforming its competitors in this market. France, for example, currently gains eight times more visitors from China than the UK, while Germany gains six times more Chinese visitors than the UK.

The economic impact of this is huge - one survey that I have seen recently suggested that if the UK had at least managed to keep the same percentage of Chinese visitors that it had in 2000, then this alone would have contributed £330m to the UK's economy last year. That's in just one year! But why are the Chinese, like many others so put off coming to the UK? I'm afraid APD is a pivotal reason.

Last year three million Chinese visitors came to Europe - of which just 127,000 visited to the UK. Part of the explanation for this is the combination of the cost of UK visas combined with our prohibitively high aviation taxes. In fact, a family of four from China visiting the UK will pay around £600 more than if they were to visit another European country in the Schengen area (which is the border check free travel area encompassing most EU countries). It is for that reason that Chinese tour operators have begun cutting out the UK from standard package tours - a stop-off in the UK no longer makes good financial sense.

This is just one reason why APD is having such a pernicious economic effect - there are many more. As the chair of parliament's aviation group part of my job is to take the temperature of my Westminster colleagues on all issues of aviation to find out their views. It would be fair to say that in the last year, the once-little known Air Passenger Duty is beginning to stir feelings among MPs.

For the first time ever a poll recently found that three-quarters of my colleagues in the House of Commons are now concerned about the impact of future aviation tax rises. They may be leading the charge, but it's not just the bosses of four of the UK's leading airlines that are opposed to APD.

The economic argument that the government should continue to levy this burdensome tax on fliers simply doesn't stack up. In the debate I tabled earlier this week it was clear to me that opposition to APD goes far beyond party politics, it goes beyond the amorphous notion of aviation' 'paying its fair share' (they do, and some)- it comes down to cold hard economics.

And that is something that the treasury should be interested in.

Close

What's Hot