Air tax increase ‘will hurt economy’

AN INCREASE in a departure tax on airline passengers will hit tourism and the wider economy, the chief executive of British Airways’ parent company has said.

Willie Walsh, the boss of IAG, said that it was wrong to increase air passenger duty (APD) when airlines were trying to attract business from the rapidly developing economies of India and China.

It was cheaper instead to fly to France and Germany, he said, and he claimed that “not a penny” from the levy was spent on the environment.

Mr Walsh also said he did not think a new airport by the Thames estuary was financially viable, and warned that Heath-row would soon lose its title as the world’s largest airport to Dubai.

Mr Walsh said he thought Chancellor George Osborne’s decision to increase APD from next April will put an unfair burden on airlines. It follows big rises in APD in 2007 and 2010, and some airlines believe the increase could be as much as 10 per cent

Mr Walsh added: “The first thing to remember is that it is not a green tax. This has nothing to do with the environment. Not a penny of this tax goes to environmental issues.

“Why I believe this is damaging is that it is making the UK uncompetitive.

“It’s making it expensive to do business here, it is deterring tourists from coming to the UK, it is deterring business people from coming to the UK.”