Airline fury as flight tax reform stalls

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AVIATION bosses have criticised the coalition government for slow progress in reforming the controversial Air Passenger Duty (APD), which is set to cost the Scottish economy up to £77 million over the next three years.

&#149 EasyJet's Carolyn McCall claims progress is slow

Concerns are growing in the airline industry that promised reforms to the costly tax have been "kicked into the long grass" as Westminster focuses on reducing the public deficit.

The government pledged in its coalition manifesto last year to reform the APD - a tax which is imposed on every passenger on planes leaving Britain except those who are on transfer.

It proposed moving to a "per plane" taxation system, which airlines claim will mean a better deal for travellers and will also incentivise carriers to cut down on their carbon footprint.

But a promised consultation on reforms is yet to materialise and fears are mounting that APD could even be increased in next month's Budget to help overcome short-term spending cuts. Carolyn McCall, chief executive of EasyJet, expressed frustration at the coalition's slow progress on APD last week during her first public outing to Scotland since taking the helm last summer.

"The frustrating thing is they (ministers] have got their hands full in terms of the deficit and so on but the environment appears to have slipped off the agenda … that is wrong because it's a problem that is here to stay and aviation has it's part to play in that. It is frustrating."

McCall said 90 per cent of Scottish air travellers would face lower overall ticket prices as a result of moving to a per plane tax.

APD was raised to 12 per passenger on European destinations in November, marking a 140 per cent hike since 2007. Britain has the highest rate of APD of any European country. Some long-haul passengers face fees of up to 85.

A spokesman for Ryanair boss Michael O'Leary told Scotland on Sunday: "This 12 tourist tax is nothing short of tourism suicide as the UK government continues to lose jobs and tourism revenues by taxing tourists instead of welcoming them.

"The UK government must follow the example of their Belgian, Dutch, Greek and Spanish counterparts by immediately scrapping their stupid and regressive tourist tax in an effort to avoid any further devastation to tourism and jobs.

"The 12 tourist tax is making the UK an uncompetitive destination for inbound tourism, forcing airlines to concentrate their schedules on outbound tourism, resulting in the continued loss of revenue to the UK economy."

Earlier this year, transport minister Theresa Villiers promised that Chancellor George Osborne would make an announcement on APD in the forthcoming Budget, but speculation is mounting that APD could be increased in the short-term and an overhaul to the system delayed until the public finances are in better shape.

Douglas McNeill, a transport analyst with Charles Stanley stockbrokers, said: "I would say it's an issue that has been kicked pretty decisively into the long grass. It's going to be a very lengthy review let's put it that way."

Earlier this month, First Minister Alex Salmond called for APD to be devolved. The SNP wants to cut the tax to encourage more direct international routes from Scotland.

The Calman Commission recommended transferring APD to the Scottish Parliament but as revealed by this newspaper last year, this proposal was excluded from the Scotland Bill.

A report recently commissioned by the three BAA airports in Scotland - Edinburgh, Glasgow and Aberdeen - estimated the tax, at its current level, would cost the Scottish economy up to 77m over the next three years and drive away more than a million passengers.