Virgin Atlantic has revealed that the Treasury collected half a billion pounds more in air passenger duty last year, even though fewer people travelled.
It says figures released today by ONS (the Office of National Statistics), show there was a 25% rise in APD revenues last year. At the same time, Civil Aviation Authority figures show there was a 3.4% drop in traffic through the UK’s eight largest airports.
As a result, Virgin chief executive Steve Ridgway has written to the Chancellor George Osborne warning that any further rises will be "hugely damaging" for UK business and tourism.
He said that while APD has been steadily climbing since 2007, the number of passenger coming to the UK has fallen 15%.
On April 1, APD will rise by double the rate of inflation following a freeze in the tax in April 2011.
"Despite strong concerns expressed by Virgin Atlantic and the wider aviation industry, these rises will – for the second time in five years – be retrospective, meaning passengers who booked tickets before the new rates were announced will also be asked to pay," said Ridgway.
Virgin Atlantic said it would not pass the retrospective increases on to passengers, at a cost of several hundreds of thousands of pounds.
In his letter, Ridgway wrote: "It is shocking that UK APD is already the world’s highest air passenger tax. Given the importance you rightly place on international trade and inbound tourism in driving growth, increasing the cost of international business and visiting the UK is the last thing that should happen at this time."
The nearest comparable air tax, said Virgin, is in Germany where the rate is approximately half UK rates.
Last year Virgin Atlantic joined forces with British Airways, Easyjet and Ryanair to call for the abolition of APD. The airlines have also called for the Government to commission an independent report into the impact that APD is having on the UK economy.
By Linsey McNeill
