ABTA fails to delay APD hike

ABTA has failed in an attempt to delay the February 1 date for the doubling of Air Passenger Duty.

The association put forward industry concerns about the problems the timing of the increase will cause at a meeting with Treasury and Revenue & Customs officials.

But, in a note to members, ABTA chief executive Mark Tanzer said: “The Treasury confirmed that the new rates will apply for departures on or after 1 February. Our suggestion that the new rates should be delayed until after nest summer’s season was disregarded.”

He said that government officials made it clear that “as far as they and ministers are concerned, ‘the policy is the policy and we are where we are’.”

ABTA has suspended talks with the Office of Climate Change over plans for best practice and benchmarking carbon off-setting schemes following the APD rise announcement.

ABTA’s efforts to postpone the introduction of the increase was made because more than 10 million bookings have already been taken for departures on or after February 1 and it will cause real problems for members collecting the additional costs.

The association also argued that there would be a significant impact on tour operator margins because package travel regulations stipulate that an amount equivalent to 2% of the cost of the package holiday cannot be passed on.

Meanwhile, a group representing scheduled airlines has warned that the doubling of APD will be harmful to the UK economy.

An analysis by the IATA, of which almost all Board of Airline Representatives in the UK (BAR UK) airlines are members, has identified a number of key points including a calculation that 6.1 million fewer passengers will fly as a result.

Other findings include:

• Doubling of APD adds 4.4% to average short-haul economy fare in Europe.

• Doubling of APD adds 3.8% to long-haul economy class journeys (slightly less in business and first class).

• Airline revenues are reduced by £1.1bn.

• The Treasury gains £1 billion in tax revenues but climate benefits worth only £53 million at most.

• Reduction in long run UK GDP of up to £400 million.

BAR UK chief executive Mike Carrivick said: “It is already widely acknowledged that taxation is a blunt instrument. This analysis by IATA also demonstrates that the consequences of doubling APD are harmful for the UK economy.

“There are few, if any, meaningful environmental gains gained by the increases; those that may exist are heavily outweighed by the loss of business performance for airlines and the UK economy.

“There are various ways in which the aviation industry can offset carbon emissions. However, a blunt taxation regime that offers nothing at all in environmental terms should be a non-runner. The decision to double APD should now be re-visited as soon as possible.”

Report by Phil Davies