A group of leading chief executives from aviation, tourism and the trade unions have delivered an open letter to the British chancellor of the exchequer calling for changes to Air Passenger Duty ahead of the 2012 Budget on Wednesday.
The group brands the tax “short-sighted and ill-considered” and argues it “will place the UK at an even greater competitive disadvantage” with emerging markets.
Chancellor George Osborne is expected to confirm an eight per cent increase in the tax when he addresses the House of Commons on Wednesday.
The Office for Budget Responsibility also added APD revenue is projected to rise from £2.6 billion in 2011/12 to £3.8 billion in 2016/17, an increase of 46 per cent.
“There will be both a huge increase in APD and that there are no plans to offset the cost of the new Emissions Trading Scheme (ETS) for passengers,” signatories of the letter explained.
“This means there will be a double tax increase for passengers this year.
“It goes against common-sense, economic logic and continues the tax discrimination against air travellers.”
ETS was introduced on January 1st and levies a charge on all flights into the European Union with a long-term aim of reducing carbon emissions.
The open letter added: “We call on the chancellor to urgently commission an independent study of APD’s overall economic value.
“To have made this decision without undertaking a comprehensive economic assessment seems to be at odds with the treasury when it says that it seeks evidence-based solutions to taxation issues.”
The statement follows the publication of research last week by the World Travel & Tourism Council (WTTC) which found that removing Air Passenger Duty would result in an additional 91,000 British jobs being created and £4.2 billion added to the economy in just 12 months.
The government’s planned APD rise, which will come into force on April 1st will mean a family of four travelling economy class to Florida will pay £260 in APD this summer – up from just £80 in 2006.
Compared with seven years ago, APD rates have risen 160 per cent on short-haul, and up to 360 per cent on long-haul. Inflation over the period has been about 18 per cent.
“Until recognition is given to the immense value derived to the UK economy from air travel, and a more equitable tax regime is established, APD will continue to inflict economic damage to the industry and the UK economy,” signatories added.
“We strongly urge the chancellor to scrap the planned APD increases in his budget, as a prelude to abolition of this tax.”
Signatories of the open letter include: Ian Doubtfire, managing director, Jet2.com; Jim French, chief executive, Flybe; Kevin George, managing director, Monarch Airline; Carolyn McCall, chief executive, easyJet; Wolfgang Prock-Schauer, chief executive, bmi; Steve Ridgway, chief executive, Virgin Atlantic Airways; Keith Williams, chief executive, British Airways; Gabriela Bordea, chief executive, TAROM Romanian Air Transport; Rob Fyfe, chief executive Air New Zealand; James Hogan, chief executive, Etihad Airways; Birkir Holm Gudnason, chief executive, Icelandair; Thomas Horton, chairman, American Airlines; Shinichiro Ito, president, All Nippon Airways; Nikos Kardassis, chief executive, Jet Airways; Hossam Kamal, chairman, EGYPTAIR; Wolf Meyer, chief financial officer, South African Airways; Masaru Onishi, chairman, Japan Airlines; Ian Ailles, chief executive, UK mainstream businesses, Thomas Cook Group; Roger Allard, chairman, All Leisure Group; David Burling, managing director, TUI UK & Ireland; David Dingle, chief exective, Carnival UK; John McEwan, chief executive, Advantage Travel Centres; Hugh Morgan, managing director, Cosmos; Amanda Wills, managing director, Virgin Holidays; Jim McAuslan, general secretary, BALPA; and Len McCluskey, general secretary, Unite.