Airline CEOs urged Theresa May’s government to stimulate economic growth by abolishing air passenger duty (APD).
Easyjet CEO Carolyn McCall pointed out that since APD’s inception in 1994, the tax rate for economy short-haul trips is up 160 per cent, while long-haul economy flights have risen 630 per cent, from £10 to £73. She added that APD on premium class long-haul flights is up “an astonishing” 1,360 per cent, from £10 to £146.
IAG chief executive Willie Walsh said APD has “fleeced customers” for £31 billion since its launch. He said that in 2006 when then Chancellor of the Exchequer Gordon Brown announced he was going to double ADP, he argued it was for environmental reasons. Despite APD being “dressed up” as a green tax, said Walsh, “not a single penny has gone to environmental issues.”
The airline bosses were on a panel hosted by the Airlines for Europe Association (A4E), alongside Norwegian CEO Bjorn Kjos and A4E managing director Thomas Reynaert.
The panellists said APD is a disincentive for inbound business and tourism as it effectively levies an ‘exit tax’ on overseas visitors. In the case of a long-haul business-class flight, this amounts to £146, up 2.8 per cent on 2015, compared to a CPI index rise of 0.2 per cent.
When asked how the government should replace revenue from APD, the aviation chiefs cited PWC research showing that removing the tax would boost UK GDP by 1.7 per cent and create 61,000 new jobs by 2020.
The group also flagged up recent aviation tax hikes in Italy and Norway that have resulted in cancelled routes and reduced demand. The Italian government has recently suspended local aviation tax. Conversely, Ireland saw a 52 per cent increase in Northern Ireland residents flying from Dublin, in the year following its abolition of air traffic tax in 2014.
The Easyjet and IAG bosses both expressed confidence in positive dealings with the new line-up in government. McCall said it was a “braver government and braver cabinet,” while Walsh said he thought Theresa May was a “stronger Prime Minister” than David Cameron.