Sir Richard Branson’s £5bn Heathrow offer rejected

Branson had made a publicity-grabbing comment to the aviation-loving Telegraph that he would give the UK government £5 billion if they went ahead with a third Heathrow runway. The DfT has said “the Government was committed to developing a new aviation policy framework that would examine all the options with the ‘exception of a third runway at Heathrow.’ ”  The Telegraph takes the opportunity of publicising the weak, flimsy report put out today by the World Travel and Tourism Council, with unsubstantiated claims about job gains and economic benefit from removing APD.  

An offer from Sir Richard Branson to invest £5bn expanding Virgin Atlantic operations if the Government dropped its opposition to redeveloping Heathrow airport was rejected last night.

By  (Telegraph)

12 Mar 2012

The Transport Department made it clear that the Government was committed to developing a new aviation policy framework that would examine all the options with the “exception of a third runway at Heathrow.”

Sir Richard made his offer in an interview with The Sunday Telegraph, coupled with a warning that thousands of jobs would be created elsewhere if there was no rethink with the emphasis on expanding in the American and Australian markets.

The Virgin Atlantic founder was not surprised by the ministry’s statement but his offer raised the stakes in an issue that has seen business and union leaders unite on expansion at Heathrow.

Airlines and travel agents are today adding to the Government’s aviation headache with warnings that passenger taxes are pricing families out of flying and are damaging the economy.  [Well, if you can take the WTTC 14 page PowerPoint report , with stunningly little evidence or justification for their figures as serious evidence. See story and  link to the rather light-weigh PowerPoint] 

The heads of four airlines – IAG, the British Airways parent, easyjet, Ryanair and Virgin Atlantic – in a rare demonstration of unity say the latest duty increase next month will add up to £500 to the cost for a family to fly to Australia and £440 to the Caribbean. [And that is in compensation for the fact that they pay no VAT on their travel, and no fuel tax on the aviation fuel].

[The actual cost of the APD for a family of 4 to Australia after this April will be 4 x £92 – which is £368. They can pay more if they can afford to go premium class. And the family of 4 going to the Caribbean will pay  4x £81 – which is £324. There has been a long and bitter dispute about the Caribbean being in the 3rd, rather than the 2nd band. For a family flying to Florida, in the 2nd band, the APD is only 4x £65 – £260.]

Further increases are in prospect they say with the Treasury banking on a 46% increase in revenue from the duty over the next four years to £4.8bn.   [No, that is not right. The OBR says it will be £3.8 billion in 2016/17.  See below].

The chief executives of the airlines – Carolyn McCall of easyjet, Willie Walsh at IAG, Michael O’Leary of Ryanair and Steve Ridgway at Virgin – urged the Chancellor to suspend increases planned over the next four years and commission an independent study into the “economic effects of this job destroying tax.”

They said: “These endless cumulative increases in APD (Air Passenger Duty) are pricing families out of flying, both from and to the UK. That means fewer visitors to the UK, which destroys jobs in our tourism, aviation and hospitality industries and chokes off opportunities for young people at a time of exceptional youth unemployment.”

The warnings are backed by the publication today of a study suggesting the tax is costing 91,000 jobs and removing it would provide a £4.2bn boost for the economy.

Research by the World Travel & Tourism Council blames the duty for the slowdown in tourism and travel and says the British tax is the highest of its kind in the world.

David Scowsill, president and chief executive, said: “This tax is damaging the economy at a crucial time and is having a negative effect on trade with countries in the Caribbean, Africa and Asia.”

The research for the council by Oxford Economics shows abolishing the duty would create an extra 38,000 to 61,000 jobs with another 30,000 resulting from lower ticket prices.

Passenger taxes, introduced by the Government both for environmental reasons and as a tax raising measure, will be included in the aviation policy review. A draft consultation document, promised in the spring, will “address the environmental impacts of flying” and “maintaining the UK’s aviation hub status.”

Critics argue that airlines and the travel industry are being subsidised because they are not meeting their full share of costs.

Lobby group AirportWatch points out that airlines benefit from duty and VAT free fuel, a concession that was worth £11bn in 2010-11.



One of the endless comments below the article says:

<<  This tax is damaging the economy at a crucial time  >>

Could the same be said about the taxes on alcohol, petrol, tobacco, etc?


The WTTC report appears to be a 14 page PowerPoint presentation, with no detail.  It is at WTTC report on APD March 2012



How much does APD bring in to the Treasury each year:

“The Government hopes to recoup about £2.6 billion from the tax in 2011/12, up from £2.2 billion during the previous financial year. According to the Office of Budget Responsibility (OBR), the figure will increase to £2.8 billion in 2012/13. The OBR forecasts that APD will earn the Government £3.2 billion by 2014/15 and £3.8 billion by 2016/17.”  Page 15.

£2.6 billion rising to £3.8 billion is an increase of 46% , between 2011/12 and 2016/17.


earlier Branson story:


Sir Richard Branson: Virgin expansion finished in UK – without a 3rd Heathrow runway

Date added: March 10, 2012

Virgin Atlantic was now focusing on expansion in America and Australia rather than the UK. Branson’s announcement is intended to put pressure on the government to expand Heathrow. He made the somewhat bizarre statement that ” If there is one thing that is holding the country back it was the decision by all three parties to do the cowardly thing and that was to say they wouldn’t allow a third runway.”. So that explains the economic downturn? Virgin’s problem is that it cannot get enough slots at Heathrow, especially if BA buys BMI. So as a bit of a bribe, Branson says Virgin would be willing to invest £5bn in expansion at Heathrow with new routes and take on thousands of new people, if the Government reversed its position on the 3rd runway. Another strange comment is that “in 5 to 10 years planes would burn clean fuel and have quieter engines.” What ??

Click here to view full story…