APD is costing Britain’s economy £4.2bn

New research by the World Travel & Tourism Council (WTTC) shows that Air Passenger Duty costs the UK economy billions of pounds and tens of thousands of jobs.

Removing it, says the WTTC, would create another 91,000 jobs and add £4.2 billion to the economy in 12 months.’¨

The research comes as Britain is about to face yet another rise in APD.

From April, a family of four flying to Malaga will pay £52 extra on the price of their tickets.

This rises to £260 for the same family to fly to Florida and £368 to fly to Australia.’¨

David Scowsill, WTTC president and CEO, said: "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 £4.2 billion."

He said in the next 12 months, the UK Government will collect £2.8 billion in extra tax from air travellers, far more than any other country in the world.

"Travel & Tourism grew by 4.1% in the UK last year, but is forecast to slow to 1.3% in 2012. This slowdown is partly due to the impact of APD, which is dampening demand.

"This tax is damaging the economy at a crucial time, and is having a negative effect on trade with countries in the Caribbean, Africa and Asia.

"We urge the UK Government to recognise the impact on the overall economy and reduce APD."

Martin Craigs, CEO of the Pacific Asia Travel Association (PATA), added: "The UK is an island trading nation, air services are the vital lifeblood of modern global commerce.

"The UK APD is now the world’s highest by a wide margin. It is certainly turning away tourism and trade from the world’s fastest growing economic region Asia Pacific."

Meanwhile, easyJet, British Airways’ parent IAG, Ryanair and Virgin Atlantic have renewed their joint attack on the Treasury, saying it intends to grow APD revenue by 46% by 2016.

The four airlines said these increases would mean a family of four paying tax of £440 to fly economy-class to the Caribbean, and £500 to Australia.

In 2005, a family of four travelling to any long-haul destination would have paid just £80.

A family of four in Scotland or Northern Ireland flying to see friends or relatives in England three times a year would have an APD bill of £420. In 2005, it would have been £120.’¨

The airlines’ CEOs, Carolyn McCall, Willie Walsh, Michael O’Leary and Steve Ridgway, 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.

"CAA figures have confirmed this week that UK passenger numbers in 2011 were at the same level as in 2004. Seven years of rising taxes have brought seven years of no growth.

"Aviation wants to, and should be, playing a leading role in economic recovery – as it does in so many other countries. But 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?

"We call on the Chancellor to suspend the April 1 rises in APD, and those planned up to 2016, while the Treasury commissions an independent study of the economic effects of this job-destroying tax.
"We are confident such a study would show that APD’s damage to economic activity outweighs the revenue obtained. It is irresponsible of the Treasury, if it is serious about pursuing economic growth, to keep piling on APD increases without conducting a study of this kind."

By Bev Fearis