easyJet warns APD hikes will cost £475m

easyJet warns APD hikes will cost £475m

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.

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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.