Virgin accuses government of “ignoring” APD consultation
Virgin Atlantic is complaining that the government did not listen to the request of the aviation industry for no increase in air passenger duty, and for just two bands of APD by distance. They have managed to get, through Crawley MP – Henry Smith – details of the consultation responses (not released to the public) to see how many respondents wanted the current system to remain. “54 out of 70 respondents called for the reclassification of premium economy. Just 11 out of 70 supported retaining the existing double-rate on premium-economy fares”.
16 December, 2011 (ABTN)
by Sara Turner
Julie Southern, Virgin Atlantic’s chief commercial officer, has slammed the government for disregarding the “vast majority” of responses to the recent APD consultation.
The Treasury published its response to the consultation earlier this month, after it confirmed plans to increase APD by some 8% in April 2012.
The 27-page document acknowledged that there had been calls for changes to APD, largely around the current banding and the inclusion of premium economy in the higher rate.
These were dismissed by the Treasury, however, as being too costly or complicated. The government also stated that a “substantial minority” were in favour of retaining existing rules.
It has now emerged that just 16% of respondents to the consultation called for the current rules on Premium Economy to stay the same, while on the matter of whether to retain the existing four-band structure, just 6% were in favour.
Virgin’s comments come after questions from Henry Smith, MP for Crawley, (see below) forced the Treasury to reveal the figures.
Chloe Smith, economic secretary to the Treasury, replied to Mr Smith: “It was clear from consultation responses on class of travel that premium economy products vary significantly between airlines.
“Any attempt to define premium economy for taxation purposes would increase the complexity of the tax, increasing the burdens for both industry and HMRC.”
Southern has since queried why the Treasury conducted “a costly consultation if you are going to ignore the vast majority of people and go with just 6% of responders on the key issue?”
She (Julie Southern) said: “It is now clear that there were clear majorities in favour of a simpler two band system and ending the ridiculous rules which mean Premium Economy passengers pay the same rates as those travelling in Upper or First class.
“The Government had claimed that ‘a substantial minority’ argued against a change in the rules for Premium Economy. We now know just 16% argued for the status quo.”
[The Treasury response states: “There were over 500 responses to the consultation, including around 250 from members of the public. In addition, Virgin Atlantic presented findings from a postcard survey of passengers and employees (which generated over 2,100 additional responses). Officials also met with a number of stakeholders and held a workshop event on APD and business aviation. ” ]
Virgin Atlantic slams Treasury over APD
Treasury secretary Chloe Smith revealed just eight out of 136 respondents argued for retaining the current four-band APD regime in the consultation earlier this year, compared with 77 which recommended a move to two bands. Another 51 advocated alternative band structures.
The Treasury announced last week it would retain the four-band regime and the double-APD rate on premium economy fares. It confirmed an 8% rise in rates from next April following the Chancellor’s autumn statement.
Responding to Parliamentary questions from Crawley MP Henry Smith, the Treasury secretary also revealed that 54 out of 70 respondents called for the reclassification of premium economy. Just 11 out of 70 supported retaining the existing double-rate on premium-economy fares. [There were over 500 responses in total] .
A Treasury spokesman told Travel Weekly the government had “consulted widely” before deciding to keep the current banding structure.
He said: “Given any reform of APD banding would need to be revenue-neutral, it would inevitably lead to shorter-haul passengers paying more. We therefore decided against a costly and disruptive overhaul of APD at this time.”
However, Virgin Atlantic chief commercial officer Julie Southern said: “What’s the point of a costly consultation if you are going to ignore the vast majority of people and go with just 6% of responders on the key issue?
“There were clear majorities in favour of a simpler two-band system and ending the ridiculous rules which mean Premium Economy passengers pay the same rates as those in Upper or First class.”
Southern added: “We cannot understand why the Treasury continues to claim changing the banding structure ‘would lead to an increase for 91% of passengers’. This is simply untrue. It depends on the rates chosen for the different bands.”
Treasury figures show 76 million (78%) of passengers from the UK fly short haul to destinations in band A and 12 million (13%) to destinations such as the US in band B.
The Treasury response to the consultation is at
Henry Smith MP Calls For Air Tax Freeze To Continue
Last night, Crawley and Gatwick MP, Henry Smith, introduced a debate in the House of Commons where he called for the freeze on Air Passenger Duty (APD) to continue.
After the debate Henry commented:
“UK air passenger duty is already higher than the European average by eight-and-a-half times; indeed only four other EU countries charge APD, five further members having recently having abandoned the tax because it cost their economies far more than it brought in revenue.
“I congratulate the Chancellor on freezing APD in the last budget, especially as it was significantly hiked up over the previous decade; my argument is that it should continued to be frozen next year and simplified, especially as we are also about to join the European Trading Scheme carbon offset system from the New Year, because hard working Britons deserve not to be priced out of a well-earned family holiday in time of household constraint and because UK economic growth as a trading nation depends on aviation.
APD consultation “a sham”
6 December, 2011 (ABTN)
by Sara Turner
The Treasury’s consultation on APD was a “waste of taxpayers’ money”, according to the chiefs of BA, Virgin, Ryanair and Easyjet.
The government’s response to the consultation, published today, revealed there would be no fundamental changes to APD, despite repeated calls for change from many in the travel industry.
This has prompted cries of outrage from the CEOs of four of Britain’s airlines, who branded the consultation “a sham”.
Easyjet’s Carolyn McCall, BA-parent IAG’s Willie Walsh, Ryanair’s Michael O’Leary and Virgin Atlantic’s Steve Ridgway earlier this month formed an unprecedented alliance to campaign against the tax.
They have today renewed their calls for the government to commission an independent study on the economic impact of APD
In a joint statement, they said: “We have no doubt this would confirm that APD’s negative effect on UK GDP significantly outweights its revenue benefit for the treasury.”
Mike Carrivick, CEO of BAR UK, of which Virgin and BA are members, has also spoken out against the Treasury’s findings.
“Treasury has either deemed matters too complex or that changes would disadvantage others – in that case why bother consulting,” he said.
Carrivick accused the Treasury of having “completely ignored” the opinions of those in the aviation and travel industry and of “digging its head in the sand over what it knows is a flawed tax”.
BAR UK’s 86 member airlines are “angry” about the outcome of the consultation, he added: “Immediate reactions are that a huge amount of money, time and effort has been spent in vain.
“The excessive increases in APD continue to discriminate against air travellers and will provide the resolve for the industry to seek meaningful change.”
AirportWatch welcomes Government announcement that APD will rise in April and APD distance and class bands are retained
December 6, 2011
Air Passenger Duty rate banding for both distances and seat class will not be changed, the government has said. The 4 distance bands will be retained. There will be no reduced APD rate for premium economy. The government said any banding system would produce some anomalies, and the 4 band system produces fewer than a 2 band system. APD will increase 10% from 1 April 2012 as announced in the Budget last week and business jets of 5.7 tonnes or more will be included from 1 April 2013. Click here to view full story…