Hike in air passenger tax will hit the aviation sector at a bad time – CBI
29-Oct-2010 The CBI has voiced its concerns over the rise in air passenger duty (APD) coming into force on Monday and urged the Government to find ways of supporting the UK aviation sector, boosting rather than damaging its competitiveness.
Since 2007, APD has increased by 213% for the longest flights departing from UK airports. Passengers now pay anything from £85 in tax for economy 'band D' long-haul flights to £170 for 'band D' premium. In 2009/10 the Government raised £1.9bn from the tax and the yield from this tax will rise to £3.5bn by 2014-15.
The UK is one of only a handful of countries in the world which tax passengers in this way. Holland and Belgium abandoned recent proposals because they would have damaged their competitive standing. There is a particular risk that airlines will choose to use international hubs, such as Schiphol, other than UK airports.
Neil Bentley, CBI Director for Business Environment, said:
"The big rise in air passenger duty coming into force next week will hit tourists and business travellers alike, with some facing a 55% increase in tax on their ticket price. This could discourage foreign visitors coming to the UK as the tax affects them when they leave the country, hitting British tourism and trade.
"The Government needs to consider what impact such taxes will have on the aviation industry's competitiveness in what is a truly global market.
"The increase comes at the end of a tough year for the aviation sector in which it has faced the volcanic ash cloud closing European airspace for several weeks, and the global recession in which UK air passenger levels dropped by 7%."