South West chairman of the Institute of Directors (IoD) Gerry Jones has urged Chancellor George Osborne to reform Air Passenger Duty (APD) in this month’s Budget to help regional airports like Bristol.
He called on the Treasury to either freeze the rate of duty or introduce two-tier pricing and accused successive governments of ‘being greedy’ with aviation taxes, which has hit the aerospace, travel and tourism sectors.
APD is due to be increased in April.
“We need to direct some passengers away from the London airports and to support airports like Bristol,” he said.
“A special case for two different APD rates to support regional airports can be easily made based on traffic congestion in the South East alone.”
He pointed to new HMRC figures showing that between April 2011 and January this year £2.247bn was raised in APD, exceeding the £2.155bn figure for the whole of the 2010-11 financial year. This January APD receipts totalled £223m, compared with £196m in January 2011.
“These surging APD revenue statistics are the latest reason to take a fresh look at those rates. They confirm that APD is no longer an environmental tax but a pure revenue raiser,” he said.
“It puts travellers off coming to the UK, it makes us uncompetitive against the rest of Europe and hits jobs in aviation and tourism.
“There are too many barriers to flying to the UK; our airports are filling up and visa restrictions are limiting tourist numbers.
“We’re pleased that the Government is looking to expand airport capacity, but it must deal with excessive tax on flights first
“Successive governments have been greedy with aviation, with the result that they now risk taxing airlines and passengers out of the sky.
“We appeal to the Chancellor to look again at the APD rise planned for April.”
The IoD’s key points for APD reform:
- APD receipts have trebled in the last decade, from £800m in 2001-02 to £2.15bn in 2010-11 and £2.25bn in 2011-12 so far.
- A business-class traveller flying from London to Singapore now pays £170 in tax, compared with just £40 ten years ago.
- Progressive hiking of APD is having a damaging effect on the range of operators and destinations available to passengers. In January Air Asia, the low-cost Malaysian carrier, announced it was withdrawing from the UK, complaining of “exorbitant” taxes.
- Heavy taxes, too few flights and visa restrictions mean the UK is missing out on opportunities in developing markets. France and Germany each managed to attract four times as many Chinese visitors as the UK in 2010. In total, France earns ten times as much from Chinese tourists as the UK.
