Any plans by UK government to remove APD on domestic flights would be unhelpful on CO2 emissions
Responding to the news that Boris Johnson’s Tory government is considering dropping all APD on domestic flights (just cutting it for Flybe would not be legal, for competition reasons) groups that understand about the need for cuts in carbon emissions reacted with dismay (to put it politely). Doug Parr, chief scientist at Greenpeace, commented: “This is a poorly thought out policy that should be immediately grounded. The Government cannot claim to be a global leader on tackling the climate emergency one day, then making the most carbon-intensive kind of travel – flying – cheaper the next. Cutting the cost of domestic flights while allowing train fares to rise is the exact opposite of what we need if we’re to cut climate-wrecking emissions from transport. The aviation sector has got away for years with increasing its carbon footprint. The last thing we need is another incentive for them to pollute more.” Caroline Lucas commented on Twitter: “Addressing #Flybe problems by reducing #APD on all domestic flights is utterly inconsistent with any serious commitment to tackle #ClimateCrisis. Aviation already subsidised – no tax on fuel. Domestic flights need to be reduced, not made cheaper.” Jenny Bates at Friends of the Earth said on Twitter: “APD cut on domestic flights would be “unacceptable & reckless” we at @friends_earth say-we must cut aviation emissions not encourage them.”
The BBC’s Roger Harrabin commented on Twitter:
“Cutting #APD will exaggerate the price advantage of planes over trains. Here’s a test for @BorisJohnson ’s commitment to #net zero emissions. @BusinessGreen @AviationWeek @friends_earth @GreenpeaceUK @thegwpf @transenv @HACAN1“
Government considering UK APD cut to save loss-making airline Flybe – to boost profitability of domestic flights
Flybe is one of the main airlines that fly domestic routes in the UK – 38% of them. Currently air passengers pay £26 APD on a return domestic flight (and £13 on a return flight to a European airport). Flybe has been struggling for years, as many of its routes are not profitable. It said in October that it recognised, with growing awareness of the higher CO2 emissions from a flight that using the train or coach, (and “flight shame”) that some of the domestic routes should be scrapped. Now Flybe cannot pay its APD bill to the government – about £100 million over three years. So the government, which talked up the importance of regional connectivity before the election, is considering removing APD from all domestic flights. That would be entirely the opposite of what is needed, to tackle UK carbon emissions, and those from UK aviation in particular. Aviation is already subsidised by not paying VAT. The loss to the Treasury from cutting domestic APD would have to be made up by taxation from other sources. It is not as if all domestic flights are vital to the economy. Most are leisure passengers, making trips to visit places or people, friends or family.
Boris Johnson says Flybe key for UK’s ‘connectivity’ as Government weighs up air passenger duty cut
14.1.2020 (The Telegraph)
Boris Johnson has said Flybe plays an important role in “delivering connectivity across the whole UK” amid reports the Government could cut air passenger duty on all domestic flights to help rescue the struggling airline.
The Prime Minister declined to reveal details of discussions with the struggling airline, but said: “We’re working very hard to do what we can, but obviously people will understand that there are limits to what a government commercially can do to rescue any particular firm.
“It’s not for government to step in and save companies that simply run into trouble, but be in no doubt that we see the importance of Flybe in delivering connectivity across the whole UK,” Mr Johnson told the BBC.
His comments came after the BBC reported the Government was considering cutting air passenger duty for all domestic flights, which would allow Flybe to defer payments due to the government and devise a rescue plan that would save more than 2,000 jobs.
Chancellor Sajid Javid will meet representatives from the business and transport departments to discuss APD and possibly deferring Flybe’s bill.
A possible deal could allow Flybe to defer a payment of more than £100m for three years, Sky News reported.
Under the plan, Flybe’s owners would be required to invest tens of millions in fresh equity into the company as a condition of any deal.
Flybe’s flights appeared to be operating as normal on Tuesday, a day after reports emerged suggesting it needed to quickly raise new funds to help it survive through the winter when demand for travel is lower.
That has heaped pressure on Mr Johnson’s government, which won seats in regions served by Flybe, helped by a promise to improve connectivity between UK cities outside the South East.
Flybe’s network of routes include more than half of UK domestic flights outside London.
Based in Exeter, it connects smaller cities such as Southampton to Newcastle and carries eight million passengers a year between 71 airports in the UK and Europe.
APD is a tax of at least £13 levied by the Government on passengers departing from UK airports, which the aviation industry has long opposed as making them less competitive compared with European rivals.
Flybe has argued that the tax disproportionately affects it, making its flights more expensive compared to its rail and road competitors, because passengers travelling on return flights within the UK will pay it twice.
The DfT and Flybe declined to comment, while the Treasury could not immediately be reached for comment.
If the Government does cut APD for domestic UK flights, other airlines such as easyJet and British Airways, which fly routes such as London to Edinburgh, would also benefit.
Flybe has 68 aircraft and about 2,000 staff and was already struggling financially when it was bought by Connect Airways, a consortium created by Virgin Atlantic, Stobart Group and investment adviser Cyrus Capital for $2.8m (£2.16m) last year.
The airline, due to be rebranded Virgin Connect later this year, has suffered as the fuel price has risen in recent months, and news stories about its demise could cause a cash flow squeeze as potential customers stop booking.
Should Flybe collapse, it would be the second high-profile failure in Britain’s travel industry in less than six months after Thomas Cook went into liquidation last September, stranding thousands of passengers.
That followed the collapse of UK holiday airline Monarch in 2017 and Flybe competitor FlyBMI last year.