A lack of support for the aviation industry could lead to trade suffering once the UK leaves the EU, a think tank has warned the government.
The Independent Transport Commission research points to the “huge economic value” of the aviation industry.
The high level of Air Passenger Duty also drew criticism from the report.
“If the UK is going to achieve its ¬vision of becoming a truly global player post-Brexit, having a tax that penalises travel to far-flung locations is likely to be counter-productive,” it said.
Cutting or even removing the tax seems ¬unlikely in the near future, however, given moves by Philip Hammond the Chancellor, in his Budget last month to increase the rate for those flying business class or with private jets, the Daily Telegraph reported.
The ITC added that Brexit will have a “significant ¬impact on the regulatory framework governing trade in aviation” making it even more essential the UK retains global aviation ties.
Establishing new aviation agreements with the EU is deemed critical given there are no historic rules to fall back on should a deal not be struck.
Many industries could operate on World Trade Organisation rules.
But air service agreements, which enable cross-border aviation, are struck on a bilateral basis between individual countries. This means there is no ¬underlying global framework to fall back on.
Written by former Bank of England economist Rebecca Driver, the report said: “In order to preserve the UK’s air connectivity, the UK will need to -ensure that there is a timely renegotiation of a significant number of aviation treaties, including with third countries such as the US, as well as with the EU.”
More broadly, the research showed the importance of aviation by stating that a new airline route between two metropolitan areas leads to a 4.6% -increase in venture capital investment, while a 10% increase in the number of intercontinental flights leads to a 4% increase in business headquarters.
Matthew Niblett, director of the ITC, called for decisive action from the government given trade talks were about to begin with the EU and the UK’s aviation policy remained “bogged down” in Parliament.
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