A4E CEOs Call on UK to Boost Tourism by Abolishing APD

During the Aviation Festival in London today, A4E CEOs gathered to ask the UK to abolish its Airline Passenger Duty, which they argue is a detriment to travel, tourism, and the economy in the UK.

easyJet’s Carolyn McCall, Norwegian’s Bjørn Kjos, and IAG’s Willie Walsh, together with A4E’s Managing Director, Thomas Raynert, argued that this tax has been a detriment to growth in aviation over the years and must now be abolished if the UK is to meet its targets of growing the travel and tourism sector.

The airline association says that over the 21 years the duty has been in place, passengers have paid more than £31 billion in taxes to fly. The association marks the UK’s ADP as the highest aviation tax worldwide, and says that since its inception in 1994, the tax had risen by 824% by 2015.

The cost of a long haul Business Class ticket in 2016 includes a £146 APD ‘exit tax’, a rise of 2.8% versus 2015 when the CPI index rose by only 0.2%. There is currently a planned rise of ADP to £150 which will take effect in April 2017. A4E characterises this as “unfairly penalising British companies hoping to do business abroad and placing an added burden to doing business in the UK.”

A4E cites figures from the British Air Transport Association which show that:

• The tax rate for short-haul trips in the lowest class of travel has increased by 160%, from £5 to £13 since 1994.
• For long-haul trips the tax rate for the lowest class of travel has increased by 630%, from £10 to £73 since 1994.
• The corresponding increases for travel in higher classes have been 420% for short-haul trips (from £5 to £26) and 1,360% for longer-haul trips (from £10 to £146) since 1994.
• Abolishing the tax, the airline CEOs argue, would create 61,000 new jobs by 2020 and boss UK GDP by 1.7%.

The CEOs were vocal arguing that the passenger taxes have been proven to discourage airlines from serving certain markets. Walsh said the previous UK government had asserted this, with Prime Minister Cameron claiming that the tax would keep airline growth in check in the UK, for the benefit of the environment. However, the CEOs argue that aviation, especially supported by newer cleaner aircraft, are already addressing environmental concerns, and that the alternative of individuals driving long distances to travel to airports where they can avoid the tax does more to harm the environment.

“Following the vote to leave the European Union every effort should be made to ensure the UK economy improves its competitiveness and secures its position as worldwide trading nation. It’s time for the UK government to get rid of this tax which punishes business and consumers”, said Thomas Reynaert, Managing Director of A4E.

This week, Scotland confirmed legislation to cut APD by 50%, as a precursor to getting rid of it entirely. “The tax is said to cost Scotland EUR 90 billion in lost tourism expenditure up to 2020,” A4E states. “Slashing APD will add EUR 1.3 billion to the Scottish economy and create 4,000 jobs, according to studies from Edinburgh airport.”

“When this tax was introduced 21 years ago it was planned to raise £330 million per year for the Treasury. In 2015, APD raised over £3 billion by fleecing nearly 110 million passengers. Meanwhile the duty has raised £31 billion in nominal terms between its introduction in 1994 and 2015,” the airlines association asserts.