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.