Call for higher air tax at London airports to pay for regional cut

Flybe chief Saad Hammad has written to the government to call for a 50% cut in air passenger duty at regional airports.

In a letter to Chancellor George Osborne, he said this could be funded by an increase in air tax at busier London airports like Heathrow and Gatwick.

He said the issue of APD had become ‘critical’ following the vote to leave the EU.

"We are beginning to see turmoil in our financial markets and our economy under threat of serious and lasting damage," he wrote.

He added: "HM Treasury has yet to comment on the outcome of the discussion paper regarding the options for supporting English regional airports against the impacts of (Scottish) APD devolution.

"Now is surely the time to address this issue, particularly with the Scottish Government pressing ahead with plans for a 50% reduction in Air Passenger Duty.

"HM Treasury has previously argued that it cannot abolish APD given the scale of its contribution to the public finances. In the absence of outright abolition, Flybe firmly believes that APD could be amended in a fiscally neutral manner to deliver an economic benefit to the UK regions, a stated aim of the Government.

"This could be achieved by lowering the levy at regional airports by 50% in line with what is being planned in Scotland, funding it through an increase at the large, slot-constrained airports in London such as Heathrow and Gatwick."

Hammad said reducing APD at regional airports would help address the ‘disproportionate’ impact on the UK regions.

"The corresponding increase on passengers using Heathrow and Gatwick would be akin to a congestion charge, a concept already well established in our economy as best shown by the London road congestion charge," he said.

He said such a move would provide a more level playing field between regional and international travellers and assist the development of regional airports and economies, ‘particularly in light of the uncertainty after the referendum vote to leave the EU’.

"It would also remove potential market distortions and risks of unfairness on passengers in England from APD devolution and reduction in Scotland and Wales," he added.

" Finally, it would provide an economic incentive for the immediate use of spare runway capacity available today at regional airports neighbouring London such as Birmingham Airport, given new runway capacity at either Heathrow or Gatwick could take more than a decade to come on stream if it is ever approved."