IATA chief executive Tony Tyler has said parts of Europe are “slowly waking up” to the economic consequences of high tax duty on aviation.
Tyler, who was speaking to the ERA general assembly in Barcelona yesterday, slammed the UK’s Air Passenger Duty as one of the worst examples of “excessive taxation”, but said there is “light at the end of the tunnel” with countries realising the benefits cuts in APD can bring.
Tyler praised the Irish government for scrapping APD and said the “significant” decision will heap pressure on Northern Ireland to keep its low rates of APD.
In April chancellor George Osborne announced the reduction of APD to some long haul destinations from April 2015. He confirmed the two highest of the four APD tax bands are to be scrapped. However, Tyler said this did not go far enough.
“Taxation of European aviation is now around $40 billion a year, twice that of the Asia-Pacific region. The UK’s Air Passenger Duty is the most egregious example of excessive taxation, but taxes in Germany, Austria and elsewhere continue to hold back air connectivity in those countries,” said Tyler.
“Despite this situation, I do see a glimmer of light at the end of the tunnel. Parts of Europe are slowly waking up to the economic consequences of disproportionate aviation taxation.
“Even the minor improvement that was announced to the APD banding earlier this year, dismal tinkering as it was, shows that the arguments are moving in our direction. So despite it sometimes feeling like we are banging our heads against a brick wall, I believe we are making some progress on this issue,” he added.
Passenger revolution
The IATA boss said the aviation industry is on the “cusp of a revolution” in the passenger experience that will “touch on everything from the moment someone starts their online ticket search, to the time they leave the airport at their destination”.
Tyler said: “For more than a decade, aviation has been playing catch-up in crucial customer expectations at various touch points.
“Some examples include internet comparison shopping, online passenger information, self-service options at the airport, the security experience, and joined-up communications with other partners in the travel chain, such as hotels.
“All these areas are going through a transformation which will profoundly change the airline-customer relationship. Regional airlines will be as well positioned to benefit from these changes as full-service international carriers.”