UK Airlines decry pending increase in APD

A number of leading UK airlines have called on that country’s Chancellor of the Exchequer George Osbourne to suspend the planned increase in Air Passenger Duty (APD), pending the outcome of an independent study of the economic effects of such a tax rise.

The increase of 8% is due to take effect on April 1st 2012 (next month) but British Airways, EasyJet, Ryanair and Virgin Atlantic claim that the UK Treasury measure will reduce passenger numbers and hinder the UK’s economic recovery.

In a joint statement issued on March 12th 2012, the companies said “We are confident such a study would show that APD’s damage to economic activity outweighs the revenue obtained. It is irresponsible of the Treasury, if it is serious about pursuing economic growth, to keep piling on APD increases without conducting a study of this kind.”

 The airlines claim that the pending increases would mean that a family of four flying from the UK to the Caribbean would have to pay close to £400 (EC$1,687.73 or US$625.08) in taxes only. In 2005 such a family would have paid a total of £80 (EC$337.65 or US$125.06) in taxes.

“These endless cumulative increases in APD are pricing families out of flying – both from and to the UK. That means fewer visitors to the UK, which destroys jobs in our tourism, aviation and hospitality industries – and chokes off opportunities for young people at a time of exceptional youth unemployment”.

In the mean time the findings of a study done by the World Travel & Tourism Council (WTTC) has suggested that removing Air Passenger Duty (APD) would result in an additional 91,000 British jobs being created and £4.2 billion added to the economy in 12 months.

David Scowsill, President & CEO of WTTC, described the APD as “a completely disproportionate tax” adding that “it is economically illogical to continue with a tax that costs the country some 91,000 jobs and as much as £4.2 billion”.

“This tax is damaging the economy at a crucial time and is having a negative effect on trade with countries in the Caribbean, Africa, and Asia. We urge the UK government to recognize the impact on the overall economy and reduce Air Passenger Duty.”

Caribbean countries and the Caribbean Tourism Organisation (CTO) have consistently condemned the systematic increase in the APD since 2010,, when a sharp decline in visitor arrival from the UK was noticed.

Grenada’s Tourism Minister Peter David, one of the sharp critics of the tax said the tax is not only negative but also discriminatory.

“The APD is not only negative, it is also discriminatory,’’ Minister David said. “How can they impose the same measure for both the Caribbean and the US?’’

The APD, instituted in 1994 is a British environmental tax, aimed at offsetting aviation’s carbon footprint. In its initial stage it was set at £5 (EC$21.18 or US$7.85) per person.

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