Four leading airline chief executives are calling on George Osborne to axe Air Passenger Duty arguing that its negative impact on the UK economy is outweighing any benefit from the revenue raised.
In a letter to the Chancellor, Carolyn McCall from easyJet, Willie Walsh from IAG, Michael O’Leary from Ryanair and Steve Ridgway from Virgin Atlantic say that what is happening in the UK mirrors what occurred in the Netherlands in 2008/09 when a similar air tax was imposed.
After a year, the levy was abandoned after a study showed that its harmful effects on the Dutch economy were nearly four times greater than the revenue it produced. The letter highlights that passenger numbers at UK airports have fallen consecutively for the last three years to a level lower than 2004.
In 2010, there were 7.4 million fewer passengers in the UK while numbers using European airports grew by 66.3 million. The chief executives challenge the Chancellor to commission an independent report on the true economic effects of aviation tax in Britain.
APD was doubled in 2007 and hiked again in each of the last two years. The UK has the highest aviation taxes in the world.
The letter states that:“For hard-working families, APD is a tax too far for the privilege of taking a well-earned holiday. It is also a tax on tourism and a tax on business.
“Aviation doesn’t just drive exports – it is a major exporter in its own right with our airlines earning nearly £11 billion of foreign revenues every year. Tourism is one of the UK’s most important earners and is worth £115 billion to the UK economy.
“We take our responsibility to the environment very seriously and have taken steps to reduce our impact. We support emissions trading (ETS) in principle but a combination of both APD and ETS when it is introduced is unsustainable.”
Separately, a survey carried out by the airlines this week shows that 85 per cent of those asked believe that aviation is important to the recovery of the UK economy and 77 per cent believe that APD is an unfair tax.