Economics and Employment

CE Delft report “Estimated revenues of VAT and fuel tax on aviation”

Date: July 2013

Author:  CE Delft

Length: 8 pages  CE Delft report on VAT and tax revenues

Summary:  If the EU decided to introduce VAT on air travel in all countries or fuel taxation in the aviation sector, it would raise tax revenues of billions of Euros per year:
 Assuming an average 20% VAT and an abolishment of other aviation taxes, additional revenues are estimated to be € 7.1 billion.
 Assuming a fuel tax of € 330-530 per m3, revenue estimates amount € 20 to € 32 billion

Assuming an average 20% VAT on jet fuel, revenues are estimated to be € 10 billion (based on current fuel prices) up to € 14-16.5 billion (prices plus fuel tax). However, where VAT was imposed on all inputs and outputs in the aviation industry this would not be additional but rather could be deducted by the airlines against the VAT receipts from airline tickets.

Link:    CE Delft report on VAT and tax revenues


2 page T&E (Transport & Environment)  briefing  ”Briefing: Does Aviation Pay its Way?”



Title:  “The Economics of Airport Expansion”

Date:  April 2013

Author: CE Delft

Length:  55 pages

Summary:   An important new report, by CE Delft, has been published commissioned by WWF, RSPB and HACAN. Its purpose is to assess whether it is true – as the aviation industry continually proclaims – that better “connectivity” will create greater economic growth for the UK. The report found that claims about the economic benefits of connectivity are not founded on solid evidence.  The CE Delft report found there is a correlation between aviation activity and economic growth, However, there does not appear to be any evidence for a causal relationship between connectivity and economic growth. Causation and correlation are not the same thing. They also found that increasing connectivity is more beneficial for developing countries or regions than for developed economies, such as that of the UK. They also found that extra connectivity in cities that are already well-connected, like London, does not necessarily deliver measurable or substantial economic benefits. CE Delft also looked at some of the economic arguments being used by proponents of airport expansion and found them to be miscalculated and exaggerated, distorting the aviation debate.  (Press release)

Link:   The Economics of Airport Expansion 



Title:  “Just a Reminder”

Date:  June 2012  
Author:  AirportWatch
Length:    2 pages
Summary: New AirportWatch Aviation Briefing summarising the key facts surrounding the airport expansion issue, on connectivity, hubs, tax, economic benefit etc..

Link:   AirportWatch Aviation Briefing “Just A Reminder” June 2012



International Air Connectivity for Business (Heathrow)

Date:  August 2011
Author:  AirportWatch
Length:  16 pages
Summary: The report shows just how well connected Heathrow, and London’s five airports in general, are for business destinations.  Heathrow has 990 departures each week to key business destinations in Asia, Latin America, North America and Europe, more than the combined total of its closest rivals, Charles de Gaulle, Paris and Frankfurt airports.  London airports combined (Heathrow, Gatwick, Stansted)  have more than double the number of flights to key business destinations each week compared with Paris, Frankfurt, and Amsterdam’s.  More London airport capacity is not needed, in order for business to fly conveniently to any important destination.
Link:  International Air Connectivity for Business 



Title:  AirportWatch briefing on economics and aviation

 Date:       January 2011
Author:    AirportWatch
Length:    8 pages
Summary:   The Government, as it begins to draw up its aviation policy in 2011, would do well to take a long, hard look at what the aviation industry actually contributes to the economy
Link:      AirportWatch economics briefing 

Title:   “Airport Jobs: false hopes, cruel hoax”

Date:   March 2009 

Author:  Aviation Environment Federation (AEF) 
Length:  23 pages 
Summary:   A new study of the employment provided by airports and airlines from the economist Brendon Sewill concludes that the Government should stop giving people false hopes about the number of jobs which would be created by the expansion of airports. 
Link:   The report and executive summary are at   Airport jobs false hopes cruel hoax 



Title:  “£10 billion a year tax bonus for airlines even with increase in Air Passenger Duty (APD)”

Date:  October 2009

Author:  AirportWatch
Length:  1 page
Summary:  Treasury figures show that, even with the APD increase, aviation continues to receive significant tax-breaks.  The notional benefit that aviation receives by paying no fuel tax and no VAT is up to £10 billion a year.  By contrast Air Passenger Duty in 2009-10 is expected to raise £1.8 billion. 
Link:   link to article…



Title:   “Plane Truths – Do the economic arguments for aviation growth really fly?”

Date:  September 2008
Author:  World Development Movement (WDM) and New Economics Foundation (NEF)
Length:   60 pages
Summary:  New research says the economic case for airport expansion is unfounded, and international tourism is more of a risk than a benefit for developing nations. This report reveals that increased air travel and tourism leaves UK taxpayers out of pocket, and benefits multinational tour operators and hotel chains, rather than the poor.     WDM press release on the launch
Link:   link to report …



Title:  “The Hidden Cost of Flying”

Date:   2003

Author: Brendon Sewill

Length: 20 pages

Summary:  This booklet contains important material.showing the tax concessions for aviation amount to £9 billion a year, a figure that has gained general acceptance. It also contains the results of the re-run of the Department for Transport computer model which showed that, if air travel paid the same tax as car travel, no new runways would be required in the UK and that the economic benefit of building new runways would be negative.This report was published in 2003, prior to the aviation White Paper. It deals with the economic aspects of airport expansion. Things have moved on, but the economic issues remain wholly relevant.  The environmental case against expansion is well known: the growing impact of aviation on climate change, noise and pollution around airports, destruction of landscape, wildlife and heritage. This booklet, however, is designed to subject the economic case for aviation growth to critical examination.
Link:  The Hidden Cost of Flying
Title:  “The Importance of Transport in Business’ Location Decisions”
Date:  2004
Authors:  Professor Ronald W McQuaid, Malcolm Greig, Prof Austin Smith and James Cooper, Napier University
Length:  126 pages
Summary:  Paper represents a brief summary of they key issues emerging from the review of literature on the importance of transport in business location decisions. Research indicates that the most important factor governing whether a company needs to be near an airport appears to be the degree to which it is involved in multinational trading or contacts.