How do the charges work out, comparing a return flight for 2 people to Rome, with driving there?
With the debate on reducing Air Passenger Duty, and increasing petrol prices, how to the costs work out, comparing driving and flying? How much tax is paid, how much duty, how much VAT?
The distance from London to Rome is about 890 miles. So driving would be a bit further, as the roads do not take a direct line.
Price of jet fuel now:
4th November 2011 http://www.iata.org/whatwedo/economics/fuel_monitor/Pages/index.aspx
$ 130.5 per barrel jet fuel which is $3.10 per US gallon. A US gallon is 3.78 litres. A UK gallon is 4.54 litres
No duty or VAT on the jet fuel
Price of petrol now:
134 p per litre for petrol http://www.bbc.co.uk/news/uk-politics-15730087
80.4 p of this is Duty (58p) and VAT (22.4p)
So a gallon of petrol costs £5.96.
And the duty and VAT on a gallon of petrol is 80.4 x 4.54 = £ 3.65
Suppose you give the plane on this short haul flight does 75 mpg per passenger http://science.howstuffworks.com/transport/flight/modern/question192.htm
and a car does, say 70 mpg (if it is a 35 mpg car, with two people in it).
Then to cover 1,800 miles, by plane this is about 26.5 gallons of fuel per passenger
and to cover 2,000 miles by car this is 28.5 gallons of fuel per passenger
For this 18,00 mile return journey (900 miles each way) the airline passenger pays no duty or VAT on the jet fuel, but the car passeners pay 28.5 x 365 = £ 104 in duty on the petrol.
The airline has paid 26.5 x $3.10 for the fuel per passenger, which is $82 , which as $1 = £0.63 is £52. And they have paid £12 for the APD on leaving the UK (no tax on the flight back). = £64.
The car driver has paid 28.5 x £5.96 per passenger, which is £169
on a return flight to Rome (or equivalent distance) from London each person pays about £39 for fuel and £12 Air Passenger Tax – a total of £64 each. (That would be £68 if APD for short haul flights rises to £16).
and if two people shared a car and drove to Rome and back, they would pay a total of £169 each, for fuel of which £104 is VAT and duty (assuming all the fuel was bought in the UK, which it would not be).
The aviation industry is still getting a huge, relative, subsidy, however one tries to work the figures in their favour.
It does not look as if air passengers are being over-charged, or that Air Passenger Duty is too high. It is very low compared to the comparable taxes applied to motorists.