FTO mounts legal challenge to APD

The Federation of Tour Operators has launched a legal challenge against the Government over Air Passenger Duty (APD).

If successful, the judicial review will mean the complete withdrawal of the tax and leave the Government open to claims by airlines, and their customers, for the repayment of over £2 billion that has been collected since 2004.

The FTO claims there are two principal challenges to the legality of APD.

Firstly, APD is in contravention of Article 15 of the Chicago Convention on International Civil Aviation, which says the UK Government cannot impose charges on aircraft solely for the right of transit over, or exit/entry from or into the UK from a fellow state.

“Charges are only permitted if they are cost-based in relation to the provision of a service, such as use of airports services. APD is not levied for any such service and is simply a tax to raise revenue for general government spending,” said the FTO.

It said the article, which was incorporated into EC law in 2004, is illegal and should be withdrawn with immediate effect.

Secondly, the FTO argues that there has been a breach of the Human Rights Act, particularly Article 1 of the first protocol of the European Convention on Human Rights

“The unsatisfactory manner in which APD has been introduced interferes with the legitimate property rights of tour operators, depriving them of income to which they are legitimately entitled,” it said.

“When the tax was first introduced in November 1994, and for all subsequent increases, the industry was given 11-12 months in which to inform customers and to include it in brochures.

“On this occasion the Government chose not to do this, allowing instead just seven weeks lead-in time before its introduction on February 1. As a result, this retrospective tax on the flights of the four million customers who had already booked their holidays will have to be borne by tour operators at a cost of some £50 million.

FTO director general Andrew Cooper said: “This substantial legal action has been launched with great reluctance. APD – which since its introduction has raised some £12 billion – is a general tax, and not one which is used to support transport or environmental initiatives.

“It emphatically is not an effective environmental measure. Indeed as a tax levied on passenger numbers not aircraft, its effects are perverse in that it penalises environmentally friendly airlines with high load factors, and rewards those with half empty flights.

“In terms of climate change, our legal action on APD should not be misunderstood. We are acutely aware of the importance of aviation meeting its environmental responsibilities. This is not best achieved through passenger levies or new fuel taxes but, in place of these, through aviation joining the EU emissions trading scheme at the earliest opportunity and at the appropriate levels.

“We will not allow any post-rationalised ‘greenwashed’ claims for APD to muddy the issue. Our legal action is being generated simply by the way in which the Government chose to introduce the new APD rates. It was unfair on tour operators and we will use all means to defend the sector from the entirely avoidable consequences.”

From February 2, APD was doubled so that passengers now pay £10 for economy class fights to Europe, £20 for business and first-class flights to Europe and £40 for economy and £80 for premium economy, business and first-class long-haul flights.

By Bev Fearis