Low-cost carrier easyJet has warned that proposed hikes to air passenger duty will lead to a fall of three million British air passengers, and reduce tourist spending by £475m a year.
The low-cost carrier also said the APD pricing structure would result in a shift from short to long-haul travel, which in term would harm the environment. A report by Frontier Economics, commissioned by easyJet, said the increases would boost carbon dioxide emissions by up to 360,000 tonnes a year.
Carolyn McCall, easyJet chief executive, said: “APD has already risen by 140% since 2007 on short-haul flights. This report provides convincing evidence that the government should not impose further increases in APD on short-haul flights and should rethink its policy on aviation taxation,” she said.
McCall also called for a per-plane tax that would favour the low-cost carrier business, which thrives on high occupancy. She said: “EasyJet is in favour of a move to a per-plane tax. Four-out-of-five British passengers would be better off under such a tax and, more importantly, it would encourage the industry to fly more efficiently.”
However, the government ditched plans for a per-plane tax this year after receiving warnings over the “legality and feasibility” of such an approach. Chancellor George Osborne said he would freeze APD this year.
Under the current regime the tax is split into four bands: £12 for an economy-class short-haul flight, £60 for an economy-class trip to a medium-haul destination such as Egypt, £75 for long-haul trips in economy and £85 for ultra-long-haul destinations such as Australia and New Zealan. First and business-class passengers pay more in each band.
According to the Treasury, APD will rise from £2.2bn last year to £3.1bn in 2013 and £3.6bn by 2016.