easyJet is calling for public support to fight a proposed doubling of the £10 Air Passenger Duty (APD).
From the next Budget, the Government intends to tax both legs of a UK domestic air journey to bring the UK into line with EU regulations. APD is currently charged at £10 solely on the outward journey. To be fair, the Chancellor also intends to introduce a new `low-cost flight` rate of tax, although this is still likely to result in higher overall rates of tax.
The proposals will make air travel to any point within the UK more expensive than at present - leading to a decline in passengers across the whole industry.
Rather than the fixed-rate charges, which currently apply, easyJet is campaigning for APD to be charged at percentage of the fare. This was the system introduced in the United States after deregulation and will result in no drop in revenue to the Exchequer whilst allowing consumers to continue benefiting from low-cost air travel.
This proposal would preserve the fare levels that have made air travel accessible to the majority and protect the competitive force which low-cost airlines represent.
easyJet calculations show that an increase of only £5 on a ticket costing £15 would lead to a decline in passengers of some 86%. easyJet has offered return fares within the UK from as low as £13 before tax. It is incredulous - and against all principles of taxation - that the air tax in a case such as this should be more than the airfare.
Air passengers to Northern Ireland and Scotland will be particularly affected. It is discriminatory to double tax charges on air travellers when competing forms of transport do not carry a tax burden. Additionally, easyJet has put regular air travel within reach of businesses without extensive travel budgets and to double the fare in tax would harm a crucial support to regional economies.
Launching the campaign today, easyJet chairman Stelios Haji-Ioannou said:
“What could be fairer than a percentage-based tax? It stands to reason that if you pay more for your ticket, you should pay more tax. We just want the tax to be fair and non-discriminatory. Why should an executive on a company-paid ticket with British Airways benefit more than an individual running his own business travelling with easyJet?”