Airlines demand UK is pulled out of ‘illogical’ aviation tax tailspin

British Airways, easyJet, Ryanair and Virgin Atlantic will bury the hatchet today and join forces to demand that the Chancellor uses next week’s Budget to puts the brakes on planned rises in air passenger duty (APD).

The four carriers warned that the Treasury wants to grow its revenues from the tax by 46 per cent by 2016 so that it brings in some £3.8 billion a year, a move branded as “madness” by the airlines’ bosses.

An 8 per cent rise in APD already planned for 1 April will mean a family of four from Scotland flying to see relations in England will pay a total of as much as £140 in tax each way, up from just £40 in 2005, the companies claimed.

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Ryanair chief executive Michael O’Leary said: “These endless cumulative increases in APD are pricing families out of flying – both from and to the UK. That means fewer visitors to the UK, which destroys jobs in our tourism, aviation and hospitality industries – and chokes off opportunities for young people at a time of exceptional youth unemployment.”

Willie Walsh – the chief executive of International Airlines Group, which owns BA and Iberia – added: “The UK imposes the highest aviation taxes in the world, and keeps on increasing them without any analysis whatever of their overall economic impact. We are exporting economic growth, and jobs, to competitor countries. How much longer must this madness go on?”

The four airlines called for the Treasury to commission an independent study to assess the economic effect of rises in APD, which has gone up by 160 per cent on short-haul flights and up to 360 per cent on long-haul journeys over the past seven years, while inflation has increased at about 18 per cent.

News of the demands from the airline bosses came as a report published today by the World Travel & Tourism Council (WTTC) – a trade body made up of hotel operators – claimed 91,000 jobs would be created and £4.2bn would be generated for the UK economy if the Chancellor scrapped APD altogether.

The council believe that the extra jobs would be created because passengers numbers would go up, requiring extra staff at airports and in their restaurants, shops and other facilities.

One of the anomalies of APD is that Britons travelling on eight-hour trips to the Caribbean pay more APD than if they fly on near-12 hour journeys to the west coast of the US, the council said.

WTTC president and chief executive David Scowsill added: “APD is a completely disproportionate tax on people’s holidays and is hitting business travel hard. When the economy needs help, it is economically illogical to continue with a tax that costs the country some 91,000 jobs and as much as £4.2bn.”

A Treasury spokesman said: “The UK government took action by freezing APD last year and has always been clear that APD would go up this April.

“The majority of passengers will only pay an extra £1 as a result of the rise. As announced at the autumn statement, we are also extending APD to private business jets for the first time.

“It is also worth noting that, unlike some other European countries, the UK does not levy VAT on domestic flights and aviation fuel is not taxed. The aviation industry will also benefit from the cut in corporation tax.”