A report released by a cross-party group of MPs has urged the government to reduce Air Passenger Duty (APD) to help the economy after Brexit.
The All-Party Parliamentary Group (APPG) on Air Passenger Duty Reform, which was formed in February this year, released the report ahead of the UK’s exit from the EU after spending months gathering evidence on the issue.
As part of the process, the group conducted a survey of airlines operating in the UK and found that more than two-thirds would invest in new routes outside of London and the south-east if APD was cut by 50 per cent, while nine in ten would invest more into existing routes. This echoes research commissioned by Airlines UK, which revealed the country could be missing out on as many as 66 routes due to the rate of air tax.
The report points to Inverness as an example, as British Airways re-established a popular route to the Scottish airport from Heathrow after the government issued an APD exemption for the Highlands and Islands.
Passengers departing from UK airports currently pay the highest rate of tax in Europe – more than double the fee charged in second-place Germany. Introduced in 1994, APD currently adds £13 per leg for short-haul tickets and £78 for long-haul economy fares. This will rise to £176 per leg for long-haul flights in business or first class starting in April 2020.
While short-haul rates have been kept the same for several years, taxes applied to long-haul tickets have increased every year despite multiple calls for the duty to be cut. In fact, the government is reportedly considering adding another tax to flights to combat carbon emissions following the introduction of a similar fee in France.
The APPG said it received a number of proposals for reducing APD, including reducing the rate during the winter season, which is typically quieter in terms of traffic, and introducing an APD ‘holiday’ for new routes that would serve to remove or reduce the tax for airlines commencing services from UK airports to destinations where no other carrier is operating. The group claimed doing so would limit the “commercial risk” of starting new routes.
However, the most widely accepted proposal was a blanket reduction or axing of APD.
Conservative MP Henry Smith, chair of the APPG, commented: “We have the highest aviation taxes in Europe, and this is simply not sustainable and runs counter to the government’s aims for a truly global Britain.
“We are calling for the chancellor to act decisively and remove this barrier to growth by cutting APD by at least 50 per cent to ensure that Britain has a flying start to our post-Brexit future.”
Simon McNamara, chair of the A Fair Tax on Flying campaign, added: “We welcome the release of this report into highlighting the detrimental effects APD is having on the UK economy. The report clearly shows that APD is holding back our connectivity at the very time that increasing our air links with the world is vital to the government’s post-Brexit international trade ambitions. As we leave the European Union, the chancellor must act decisively during the upcoming budget and cut APD by at least 50 per cent to remove this barrier to a truly global Britain.”