IATA calls on British government to reduce burden on aviation

IATA calls on British government to reduce burden on aviation

The International Air Transport Association (IATA) is encouraging the UK government to use the national aviation policy consultation to enable the sector to generate more economic growth and jobs.

Specifically, IATA asked the government to address high taxes and severe capacity constraints while developing policies to support the industry’s commitments on climate change.

“The UK is the world’s second largest market for international air travel, bringing enormous benefits to the economy,” said IATA director general Tony Tyler.

“Aviation in the UK is at the centre of over £90 billion of economic activity and supports the livelihoods of nearly 1.8 million people.

“The connectivity provided by aviation enables London to function as a global financial centre, to be a global hub of culture and to host the Olympics.

“Great Britain is an island. Aviation connects it to the global community and global economy. Government policies must recognize and nurture that important role,” added Tyler in a speech to the UK Aviation Club.

Aviation’s future capability to be a pillar supporting the UK economy is jeopardised, however, by a regulatory approach that constrains the growth of the UK’s only hub airport (London Heathrow) and a fiscal policy that burdens the industry with heavy taxes, argued IATA.

IATA encouraged the government to address these issues in a national aviation policy that will follow from the ongoing consultation process.

Capacity

IATA supported the further development of Heathrow over other proposals to provide hub capacity in the south east of the UK.

Heathrow, a vital component of the UK’s economy supporting 220,000 jobs and £11 billion in economic activity, is operating at 99 per cent of its capacity.

New capacity is urgently needed to support the needs of London as a global capital of finance and culture.

“The UK is falling behind in connectivity. London has less frequent links to 27 emerging market destinations than the daily connections offered from continental European hubs.

“If the UK wants to do business with these developing markets, air connectivity is the enabler,” said Tyler.

IATA forecasts indicate that 205 million people will travel to or from the UK in 2015, accounting for about one in every seven international air travellers.

“The government needs to make Heathrow’s expansion a priority in a competitive new UK aviation policy so that the UK can realize the economic benefits of connectivity and continue to punch above its weight globally,” Tyler said.

Taxation

The national policy must also reduce the UK’s high tax burden on aviation.

“Chancellor Osborne’s proposal to reduce corporate taxes from 28 per cent to 22 per cent by 2014 is welcome relief, but it is not a comprehensive solution.

“The high cost of doing business in the UK must also be addressed,” Tyler said.

“The ever increasing Air Passenger Duty (APD) is a £2.9 billion annual burden on UK businesses reliant on connectivity.

“And passenger demand is growing more slowly than at other European hubs because the APD is pricing air travel out of the range that consumers can bear.”

IATA estimates the planned increase in the APD will result in the loss of 7,000 UK jobs on top of the damage that it is already doing to the economy.

Environment

IATA urged the UK to ensure that its aviation policy supports the industry’s climate change commitments to (1) improve fuel efficiency by 1.5 per cent annually to 2020, (2) cap net carbon emissions from 2020 and (3) cut net carbon emissions in half by 2050 compared to 2005 levels.

“Aviation’s license to grow depends upon managing its environmental impacts. We have a long history of doing precisely that in partnership with regulators.”

IATA called on the UK to support the development of sustainable biofuels for aviation with policy measure that de-risk the investment needed to reduce cost and increase production.

It also urged the EU to find a solution to the global impasse developing around the EU’s inclusion of international aviation in its emissions trading scheme through the International Civil Aviation Organization (ICAO) process.