Better use of Air Passenger Duty

By Tim Williamson, director of marketing & content Responsible Travel

APD is very unlikely to ever be reduced and will certainly never be abolished. The travel industry needs to wake up to this and change the message.

Aircraft taking off

It is one of the easiest taxes for the Treasury to collect as airlines need to administer their own payments and it currently brings in £3bn and is forecast to bring in £4bn by 2021 – see page 58 of the Chancellor’s Autumn Statement from last year here.

You can also hardly say that APD is inhibiting travel from the UK and the last dip in growth was down to the global financial crisis and not a UK tax. The CAA’s figures for commercial flights and terminal passengers shows strong growth over the last few years and, although ratings agencies like Moodys are predicting that Brexit and the fall in the value of the pound will half the growth predictions of air travel from the UK to 3% in 2018, it’s still growing. The tax has only ever been reduced when there was a significant drop in air travel after 9/11.

What is disappointing about APD is thinking about where it all started and what it could have been. In 1994 APD was introduced under the guise of an environmental tax but in reality it was introduced as the government of the day recognised that aviation was lightly taxed as fuel duty and VAT are not charged on aviation fuel and even back in 2011 Friends of the Earth reckon this equates to a £9bn saving for the industry making APD look very good value. From its roots none of the money from APD has ever been ring-fenced or allocated to reduce the environmental impact of flying.

So how about changing the message? Stop going on about reducing or abolishing APD, which is not going to be something a cash strapped government is going to consider with so much financial uncertainty around the corner – Brexit and caring for a rapidly aging population to name some of their bigger challenges. Instead why not start to lobby to get at least some of the £3bn allocated to making flying more sustainable? This is surely in the best long term interest of the industry and its shareholders and what we think should be at the centre of the government’s new Aviation Strategy. The fact that airlines, apart from Ryanair, can’t make much money in the short term is more down to the ultra low prices caused by too much competition in an over-supplied market rather than a single tax.

Aviation is way behind the automotive industry in terms of developing alternative power and the government is actively incentivising the car industry and drivers to move away from fossil fuels so shouldn’t some of the APD funds be used to incentivise the airline industry to develop and trial battery powered planes? Flights on these aircraft should be exempt from APD.
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