IATA slams UK aviation tax reform

THE International Air Transport Association labelled the increase in UK Air Passenger Duty (APD) and its reform into four bands as an enormous mistake. The changes were announced in the UK Chancellor’s Pre-Budget Report, with the increases to take effect from November 2009.

“The Chancellor wisely abandoned plans to introduce Aviation Duty, the proposed per plane tax, on the grounds that this is no time for introducing greater instability in the airline industry – a catalyst for economic growth.

Unfortunately the wisdom stopped there. Adding millions of pounds to the cost of travel from the UK will not help the Chancellor set the UK economy back on a growth path. We have the right diagnosis but the wrong prescription,” said Giovanni Bisignani, IATA’s director general and chief executive officer.

“This is another cash grab by the Treasury, thinly disguised as an environmental measure. The UK Government already admits that the current GBP2 billion taken from APD, more than covers the cost of aviation’s climate change impact. Airlines take their environmental responsibility seriously. In this year alone, IATA-led efficiency measures have saved over 14 million tonnes of CO2. How much CO2 will the increased APD save? The blunt instrument of taxation does nothing to improve environmental performance,” said Bisignani.

None of the APD revenue is earmarked for environmental initiatives. “I ask a question that I have asked many times before. How many trees will the Treasury plant with the cash? And where is the commitment to end APD when aviation joins the European Emissions Trading scheme in 2012? We cannot accept tax upon tax in place of a sound environmental policy,” said Bisignani.

IATA also criticised the UK Government’s proposal for creating commercial distortions. “The restructured APD does almost everything wrong. It is a disproportionate burden for trips over 2,000 miles. It disadvantages UK carriers compared to their rivals. The highest travel taxes in the world reduce the UK’s competitiveness for businesses that depend on global connectivity.

Increases in economy fares are a step backwards to the days when world travel was only accessible to the wealthy. The environment won’t see even a penny of the cash collected. And, the proposal puts the UK’s 200,000 aviation jobs at greater risk. The only one smiling is the Chancellor as the Treasury counts its billions,” said Bisignani.

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