British Airways has called for a three-pronged approach to reform of Air Passenger Duty to make it more consistent with the government’s overriding objective of economic growth.
The call comes as figures from the Office for National Statistic reveal a sharp fall in consumer spending during April which, coupled to the increase in the number of people claiming unemployment benefits revealed yesterday, could suggest the economy may be slipping back toward recession.
In its response to the treasury’s consultation on APD, the airline argued:
The four distance bands of APD should be reduced to two: Flights of up to 2,000 miles, and flights of more than 2,000 miles. This would help to address the current disproportionate burden on long-haul flights, and the discrepancies that arise by using capital cities to determine bands. In the last two years, APD on long-haul has risen by between 50 and 112 per cent, while the rise for short-haul has been 20 per cent.
Premium economy seats, such as British Airways’ World Traveller Plus, should be taxed at the same rate as economy seats, rather than at the higher rate applying in the Club and First cabins.
APD should not be increased beyond present levels and should start to be phased out once revenues from the European Union’s Emission Trading Scheme start flowing to the UK Treasury in 2013.
A family of four flying in economy class from the UK to Florida currently pays £240 in Air Passenger Duty. Travelling to the Caribbean, they pay £300 – or £600 if they are in premium economy.
These rates are more than double what a family from Germany would pay. Flying from France, a family would pay just £15 and in 22 EU countries, there is no aviation tax at all.
The response says that aviation is a social and economic good that is vital to the success of UK plc, argues BA.
Aviation supports more than 500,000 jobs in the UK and provides the transport links that are vital to the success of UK businesses in a globalised economy.
It strengthens international links, brings families and friends together and broadens horizons, added the airline.
Keith Williams, British Airways’ chief executive, said: “Aviation in the UK is the most undervalued and overtaxed industry in Britain.
“We want to play our full part in assisting Britain’s economic recovery, but we are held back by levels of tax on flying which are higher than anywhere else in the world.”