Trade leaders warn 'per plane' tax will be futile and damage competition

Government plans to introduce a "per plane" tax to replace air passenger duty (APD) would be "ineffective and damage competitiveness", business leaders warned today.

A global "cap-and-trade" scheme was the best way for aviation to meet its climate obligations, the CBI said. The UK government is considering bringing in a per-plane duty instead of the APD airport departure tax which is set to rise this autumn.

In a report published today, the CBI said that an overall cap on aviation emissions should be agreed.

Airlines would be allocated permits to cover their emissions, and if they exceed their permitted level of emissions they would have to purchase surplus permits from companies that have made extra progress in reducing their emissions.

CBI deputy director-general John Cridland said: "The coalition government should be wary of introducing a domestic 'per plane' duty to replace APD.

"It would be ineffective, damage competitiveness, and would distract from the important goal of establishing a global cap-and-trade scheme."

He went on: "Aviation is an economic enabler like no other industry.

"Britain can only be truly open for business when it has access to foreign markets to exploit investment opportunities and trade goods and services.

"The recent disruption caused by volcanic ash demonstrated just how much aviation underpins our modern economic life."

Cridland's warnings over APD echo those of Gordon Dewar, the outgoing head of Edinburgh airport, who last month told Scotland on Sunday that charging on a per plane basis could double the tax rate. He said that such a move would force airlines to raise fares or pull out of Scotland.

Dewar said: "We are so peripheral. If you are coming here from Europe you have to fly, and if we are suddenly doubling tax it will make Scotland a deeply unattractive place to get to."