Travel and airline industry leaders have roundly condemned Chancellor George Osborne for failing to take action on further rises in Air Passenger Duty
The Budget decision to proceed with a double-inflation increase in APD was greeted with dismay as it ignores cross-industry lobbying against further hikes in the tax – the highest in Europe.
Airport Operators Association chief executive Darren Caplan said: “I am dismayed that the Chancellor has gone ahead with this double inflation increase. We already have the highest aviation taxes in Europe, and this new increase will hit the tourism industry and needlessly jeopardise the recovery of the economy as a whole.
“We are an island nation and aviation connectivity is crucial to the economy – indeed, with so many sectors reliant on aviation, in some senses it IS the economy. This increase is unhelpful and unwelcome and we will be campaigning against it as the Finance Bill progresses through the Commons.”
Craig Richmond chief executive of Peel Airports, which owns Liverpool John Lennon and Robin Hood Doncaster Sheffield airports, said:
“It never ceases to amaze me that a government that ‘talks the talk’ about a Budget that backs business, can at the same time fail to ‘walk the walk’ by then doing the opposite.
“We should be talking about scrapping APD completely if we want any chance of helping the aviation industry to generate improvements to the economy through more jobs, more investment and more visitors to the UK, yet here we are facing increases both this year and next.
“Our European competitors will undoubtedly be celebrating this news.”
Tui Travel voiced disappointment that the Chancellor has announced a further increase in APD by inflation in April 2013 on top of the double inflation increase to come into effect on April 1.
“This comes on the back of the Chancellors’ refusal last year to amend the anomaly of Premium Economy charges and the current unfair banding system,” a spokesman said.
“Tui Travel has consistently given our support for the inclusion of airlines into EU ETS (Emissions Trading Scheme) which encourages airlines to operate the most environmentally efficient aircraft. Given this support, the rise in APD is an unnecessary blow for the aviation industry as a whole and an indication of how little regard the government has for the whole area of tourism.
“We would call on the government to implement a system to offset future EU ETS increases with long term reductions in APD and not to continue with planned increases.”
Virgin Holidays managing director Amanda Wills said: “The Chancellor’s silence on APD in today’s budget spoke volumes about the Government’s support of an industry that contributes billions to the Treasury’s coffers every year.
“The prospect of the rise in APD leaves us with no option but to work even harder to give the deserving British consumer their holiday this year, when the pressure on margins is already substantial.
“I can’t help but think it was a missed opportunity for Mr Osborne to give some relief to an industry which already has to battle rising costs elsewhere, as well as those overseas communities which are dependent on international tourism.”
Airline chief executives Carolyn McCall (EasyJet), Willie Walsh (IAG), Michael O'Leary (Ryanair) and Steve Ridgway (Virgin Atlantic), jointly said: “At a time when the government talks about creating jobs and growth, its blinkered insistence on further increases in Air Passenger Duty achieves precisely the opposite.
“Youth unemployment is at record levels. Inbound tourism is a major employer of young people, but international visitors are being turned off the UK because of the exorbitant level of APD - which is by far the highest air travel tax in the world.
“In every other leading country, aviation is an expanding industry that underpins and facilitates growth in other parts of the economy. In the UK, rises of up to 360 per cent in APD in the last seven years are squeezing the life out of the economy. The CAA has confirmed that UK passenger numbers last year were the same as in 2004.
“Yet again, the Treasury is pressing ahead with further rises without any analysis of their effect on the wider economy. In the absence of such a study, we must assume that the Treasury knows it cannot justify this job-destroying tax in overall economic terms. APD must be scrapped.”
ABTA chief executive Mark Tanzer said: “The Chancellor’s confirmation that he intends to go ahead with double inflationary rise in APD on 1 April, together with a further increase in 2013, is incredibly disappointing.
“The Government has repeatedly said it looks to travel and tourism as one of its key drivers of growth but instead of listening to concerns that APD is stunting this growth, not only in travel but in the wider economy too, it has chosen to significantly increase the tax burden.”
Scottish Passenger Agents Association president Kevin Thom said there was “little surprise, but deep disappointment and frustration” in the Treasury’s announcement following the Budget.
He said: “The claim by this Government that it listens is a complete sham. Time after time, organisations like our own - across the spectrum of the travel sector in the UK - have made it plain to the Chancellor and his colleagues that APD is doing real and serious damage - to the economy in Scotland, where many of our travellers pay APD twice due to their need to connect, and to the wider UK economy where both inbound and outbound travel are suffering.
“APD at this level makes no sense - for the economy or the Exchequer - because it is depressing the volume of air travel, and as a consequence the government's tax income.
“The recent WTTC report confirms, reducing APD would encourage many more visitors to the UK bringing £4.2 billion into the UK economy. With his continuance of APD at this level he is shooting himself and the UK as a whole in the foot.
“Following up on this inexplicable and unjustifiable move by the government, we will be discussing with out colleagues in the Fair Tax On Flying alliance, our next move in what will be an ongoing campaign conducted with renewed energy and determination.
“The Coalition should be in no doubt that if the government will not listen to common sense and act accordingly, a travel sector united as never before will continue to hammer home our point at every opportunity.”
British Air Transport Association chief executive Simon Buck said: “We very much regret the Chancellor’s decision to confirm the double inflation increase in the rate of APD from April 1. Passengers departing from UK airports already pay the highest taxes on flying in the world and this further increase will do nothing to support the Government’s aspiration to grow UK tourism and support British jobs.”
Hotels.com president David Roche said: " It is very disappointing that the Chancellor has chosen to ignore calls to reduce the rate of APD, which is already the highest in the world. This tax deals a blow to the UK's tourist sector in a year when we are gearing up to host millions of visitors from around the world.
"It is a tax that dampens visitor numbers and acts as a brake on job creation in the domestic hotel industry and wider tourist economy.
"Air passengers are a vital part of the travel industry, bringing valuable income into this country, but they are very price sensitive. APD not only makes it more expensive for leisure and business people to travel abroad but also deters visitors from coming into the UK.”
“The UK should be incentivising inbound visitors so that the country can benefit from the ancillary spending that influx would bring.”
British Hospitality Association deputy chief executive Martin Couchman said the Chancellor had missed an opportunity to create more jobs by making Britain’s hospitality and tourism industry competitive with other European countries by failing to reduce VAT for the sector.
He said: “The Chancellor said that he wanted Britain to have a tax system that is more competitive for business than any other major economy in the world, but Britain has the third highest VAT tax rate on hotel accommodation in Europe.
“We are continuing to compete with countries like France and Germany which charge seven per cent on hotel accommodation, Spain which charges eight per cent and Italy which charges 10%. Of all the 27 EU member states only Denmark and Lithuania charge a higher rate.”
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