The heads of 12 airports, including BAA chief executive Colin Matthews and Aberdeen airport managing director Derek Provan, have today sent an open letter to Chancellor George Osborne, warning that the increase next year will further “stifle” the aviation industry at a time when passenger numbers are flat-lining.
More routes will be cancelled to and from UK airports as airlines will choose to plough investment into cheaper European services, the bosses argue.
The UK already has the highest rate of aviation tax in Europe. Many countries on the Continent, including Denmark, Norway, Malta and the Netherlands, have scrapped similar taxes fearing possible damage to their economies.
Gordon Robertson, head of communications at Edinburgh Airport, warned the jump in Air Passenger Duty, which is linked to the Retail Prices Index measure of inflation, would have a particularly detrimental effect in Scotland.
“We are all affected by APD – probably more so in Scotland than the south-east of England because we don’t have the transport links they do.”
While airlines are often reluctant to publicly state the reasons for cancelling routes, Robertson said APD is often cited privately as a primary factor by major carriers.
“There’s always anecdotal evidence that airlines are considering it,” said Robertson. “Anecdotally we hear that a lot of the large airlines are looking at the UK and it’s a factor they take into account.”
According to a survey of all of the UK airports published today, nine out of ten said high levels of taxation had already sparked a reduction in passenger numbers over the past four years.
APD is imposed on every passenger on planes leaving Britain, except those travellers who are on transfer. In November, the duty was raised to £12 per economy passenger on European destinations, marking a 140 per cent hike since 2007. Some long-haul first-class passengers face paying as much as £170.
Earlier this year, the three Scottish airports said last year’s rise alone would cost them one million passengers over the next three years and the economy up to £77m in tourism spend.
Robertson argued that the next hike – which is likely to add more than 10 per cent – will come at an even greater risk to Scotland’s competitiveness and its ability to attract more direct routes. The RPI stands at 5.6 per cent. “It’s stopping people coming to our country,” Robertson said.
In today’s open letter, the 12 bosses say: “Airports are the lifeblood of every part of the UK. Yet the industry we serve is one of the highest taxed in the UK. The UK’s APD top rate is eight-and-a-half times higher than the next most expensive flight taxes levied by another country in the European Union.”
They add: “The business case for further rises in APD simply does not stack up. The impact will be to deter people from flying, or to displace flights to Europe, rather than to generate more tax revenue. It is inconceivable that this will not have a negative effect on the UK’s airports – and the hundreds of thousands of people who we employ. We urge the Government to re-think its plans…”
The three Scottish airports are also supporting a campaign for APD to eventually be devolved.