Coalition proposes higher air tax from South-East airports to beat congestion
Date added: 1 January, 2011
More taxes! Coalition proposes higher air tax from South-East airports to beat
congestion
31.12.2010 Daily Mail
A Government proposal to charge passengers more if they want to fly from airports
in the South-East has been branded ‘outrageous’ by travel experts.
Aviation minister Theresa Villiers has confirmed that the Government is looking
at imposing higher taxes on passengers flying from southeastern airports in a
bid to reduce overcrowding.
But the potential tax hike is certain to cause uproar within the travel industry
and among passengers who will effectively be discriminated against for living
in the wrong part of the country.
The price difference is an attempt to encourage passengers to use regional airports
instead of relying on busy Heathrow, Gatwick and Stansted.
It comes after the Coalition ditched plans for a third runway at the world’s
busiest airport Heathrow, as well as a second runway at Gatwick and expansion
at Stansted.
Ms Villiers said: ‘It is not inconceivable that our tax reform might look at
a higher tax to fly from congested South-East airports.
‘A key part of our approach is to create conditions for regional airports to
flourish, and this also has the potential to help relieve overcrowding at South-East
airports.’
Worryingly, it seems the taxation would have to be significant in order to encourage
southeastern holidaymakers to pay for travel to airports that could be significantly
further afield.
Bob Atkinson, travel expert for travelsupermarket.com, has described the idea
as outrageous.
‘With my economic hat on I understand where the Government is coming from,’ he
told TravelMail.
‘But it is absolutely outrageous to try an introduce different pricing in different
areas of the country.’
He continued: ‘I think it would be completely the wrong thing for UK and non-UK
consumers. Pricing people out is not the answer to the problem.’
The proposal comes after a tough few years for both the travel industry and holidaymakers,
which has seen Air Passenger Duty increase more than four-fold in the past four
years.
Holidaymakers are also facing rise in travel insurance policies from January
4, thanks to an in crease in Insurance Premium Tax.
Although some insurers like the Post Office are freezing their prices for the
first three months of the year in a bid to keep prices as low as possible.
Ticket prices are set to increase as well, thanks to the rising cost of fuel
which will be passed on to customers.
An ABTA spokesperson told TravelMail that as far as the travel association was
aware there is an EU regulation which stipulates the same tax must be levied on
all intra-EU journeys.
The spokesperson added: ‘We have been talking to the Treasury as we favour a
tax that incentivises airlines to fly full loads on more efficient aircraft.
‘We will be engaging with the Treasury regarding the consultation.’
Comparing the UK to the likes of Dubai, which has an international airport with
‘six or seven runways’ Mr Atkinson told TravelMail Britain was at serious risk
of not keeping up with the competition.
‘Everyone else is investing in transport by expanding and we seem to be restricting
ours.
‘It is up to the Government to sort out a long-term vision to benefit the UK.’
Referring to the proposed charge, Mr Atkinson continued: ‘Who will come to Britain
if you can’t fly directly to where you want to go, or if the cost is so prohibitive?
‘It wouldn’t surprise me if budget airlines and the likes of Ryanair would just
refuse to fly from the more expensive airports.’
A spokesman for Heathrow’s owner BAA told the Telegraph: ‘We already have the
highest aviation tax in the world in the UK and if we are looking at increasing
taxes on Heathrow – the UK’s only hub airport – we will simply make the country
less competitive.’
However, Neil Pakey, network marketing director for Vancouver Airports, which
owns Liverpool Airport, welcomed the Government’s closer inspection of Air Passenger
Duty.
‘The present situation isn’t working,’ he told TravelMail. ‘Especially in certain
regions where there is a low propensity to spend, as they are hit harder by a
flat-rate tax.’
However, Mr Pakey suggested there were other ways to tax, such as taking a percentage
of the ticket price.
He also explained that ideally there would be no APD at all in a bid to keep
Britain competitive enough attract major airlines.
‘The Dutch have scrapped it, as have the Greeks and in Ireland it has been reduced,
they wouldn’t be doing that if air tax worked. It needs to be looked at strategically,’
he added.
‘Airlines are internationally competitive now, they can take their business to
other European regions, they don’t have to fly to the UK. We need to level the
playing field.’
The Treasury currently earns around £3.8 billion a year from Air Passenger Duty.
As well as raising the tax on South-East airports, the Government is also thought
to be considering promoting Birmingham Airport as an ‘overspill’ airport for travellers.
see also
Departure tax rates could help regional airports
23.12.2010 Manchester Evening News
By Adam Jupp
Special departure tax rates on flights could be introduced to help regional airports
such as Manchester, the government has indicated.
Responding to a question from Manchester Airports Group (MAG), aviation minister
Theresa Villiers said Downing Street was considering a reform of Air Passenger
Duty (APD) to reduce the impact it has on regions like the north west.
That could also see tax on flights from congested airports in the south-east
hiked, replacing the existing one-size-fits-all policy.
APD, which is passed on to passengers through ticket prices, has already been
blamed for Manchester Airport missing out on new routes that have gone to European
hubs, where the levy does not apply.
And it is feared the tax, which rose for the second time in as many years in
November, could act as a barrier to connections with the Far East being established
in the future.
But Ms Villiers told the New Direction for Aviation Conference in London: “It
is not inconceivable that our tax reform might look at a higher tax to fly from
congested south east airports.”
Ms Villiers said charging a higher rate of APD on flights from the likes of Heathrow
and Gatwick would create more of a balance between them and those in the UK regions,
such as Manchester.
She was responding to a question from MAG’s external affairs director Jonathan
Bailey and added: “A key part of our approach is to create conditions for regional
airports to flourish and this also has the potential to help relieve overcrowding
at south east airports.”
APD generates £2bn a year for the Treasury and is touted as a green tax but critics
say the cash it raises does not go towards environmentally-friendly schemes.
On November 1 2009,, APD on economy short-haul flights to Europe went up from
£10 to £11 and it rose again to £12 last month.
Duty on flights to the USA, Russia and the Gulf has jumped from £40 to £60 over
the past two years, while a Caribbean flight saw its APD rise from £40 to £75.
Meanwhile, economy flights to Australia more than doubled from £40 to £85, meaning
a business team or family of four travelling down under could now be paying more
than £300 more than they were two years ago.
There are also allegations the tax is flawed. For example, a 7,000 mile flight
to Hawaii attracts a lower levy than one to Jamaica – 4,500 miles away – because
Washington DC is closer to London than Kingston and the duty is based on distances
between capital cities.
Mr Bailey welcomed Ms Villiers’ comments. He said: “We are pleased to see that
the issue is being taken seriously.
“The regional impact of APD is such that some airlines have already told us they
will not fly to Manchester now because of the tax, with Air Asia X being the most
prominent example, having chosen Paris over Manchester.
“The thing that is really a risk now is that we won’t get connected with the
emerging markets in the Far East and Asia when the tax is as harsh as it is..
“And there is not a level playing field because there is no similar tax in Europe,
in fact the Dutch government scrapped its equivalent because of the impact it
was having on airports, so we are shooting ourselves in the foot, with no environmental
benefit whatsoever.”
The government had hinted at replacing APD with a ‘per plane’ tax but it is felt
that could be even more damaging to regional airports.
Such a levy would mean someone on a return journey to the Far East, starting
in Manchester and connecting in London, would have to pay the tax three times.
http://menmedia.co.uk/manchestereveningnews/news/business/s/1403711_departure_tax_rates_could_help_regional_airports_
Posted: Saturday, January 1st, 2011. Filed in General News.
