Gordon Brown has doubled Air Passenger Duty for all travel from 1 February. But in an internet age when tickets are booked far in advance, airlines must decide who pays
A startled travel industry was shaken last month when would-be prime minister Gordon Brown disclosed to Parliament that he proposed to double Air Passenger Duty on all paid for air journeys taken from 1 February. Clearly the Treasury had not thought this one out. In the internet age people book in advance. Is British Airways and all the other carriers going to collect the extra duty at the gate or are they just going to absorb the charge?
BAR UK (Board of Airline Representation UK) chief executive Mike Carrivick, whose members include the three major British carriers and most international airlines with flights into this country, had this to say: ”The announcement in the Chancellor's pre-Budget report on 6 December that Air Passenger Duty (APD) was to be increased was not exactly a shock. Supposedly increased for environmental reasons, it soon became clear that this was a revenue creation process to raise another ”1bn ($1.9bn), without any environmental benefits whatsoever.
The rate of increase (a doubling of current levels) was a surprise, but that the new levels would apply for all travellers from 1 February, a mere seven weeks away from their announcement, was a bombshell.
The Chancellor, and his officials, have completely disregarded the fact that millions of passengers, in the UK and overseas, have already purchased tickets for travel from1 February. Putting aside the legal niceties as to whether the extra tax can be levied onto passengers it is completely impractical to undertake such an exercise. Consequently, the liabilities that have accrued for airlines, and tour operators, is expected to exceed ”100m ($194m).
The industry cannot afford to simply absorb such additional costs, yet is expected to do so by the UK Treasury.”
Industry representatives, including BAR UK, have met with Treasury officials to debate the issues, at which time it was proposed that the new APD levels became effective for all tickets after 1 February but only charged from the date it was announced, not retrospectively.
The Treasury's mantra was that it had been a most interesting and valuable meeting ”but, we are where we are,” they said.
What happens on 1 February? We don”t know. Are some airlines going to ask their passengers for the balance of the fare, or fork out the money themselves? If they ask a passenger and he says no do they refuse to carry him? Ryanair, to their credit, have emailed all customers asking for the tax. If you don”t want to pay they will re-fund the whole fare. However you cannot pay at the airport, which is clearly going to produce problems, but is typical Ryanair. The company believes in confrontation.
The airlines have been charging the extra tax since it was announced in Parliament in December. The Treasury should back down on this one. They will be applauded if it did so.
Malcolm Ginsberg
editor-in-chief