Government’s air travel tax pledge in doubt

The government is preparing to reverse a key coalition pledge to bring in an
environmental tax on air travel after finding that European Union laws would prevent
it.

Last year’s coalition manifesto contained a pledge to reform air passenger duty
(APD), a tax imposed on all passengers on planes leaving the UK except those who
are on transfer, to curtail greenhouse gas emissions. Both parties in the coalition
had said they wanted to tax “per plane” to give airlines the incentive to cut
down on their carbon footprint.

Channel 4 News reported that the coalition has now shelved the plan, unable to
make the change as it falls foul of EU laws.

Responding to the report, government sources admitted that there were “question
marks” over the plan, but refused to confirm or deny that it would be abandoned.

The government has been under pressure from airlines, airports, tour and travel
companies – including British Airways, Virgin Atlantic, Heathrow and Gatwick airports
– to shelve the reforms. Last week, they warned George Osborne against raising
air passenger taxes in his budget this month. The airlines said: “We recognise
the exceptional difficulty of the country’s fiscal position and we are content
to pay our fair share. But the UK airline industry is already the most heavily taxed in the world and any further tax burden will
be counter-productive to the country’s economic recovery.”

However, low-cost airlines such as easyJet have younger, more fuel-efficient
fleets. Last month, Carolyn McCall, chief executive of easyJet, said the coalition
was making slow progress on the APD and suggested the environment had fallen down
the coalition’s agenda.