Opinion: Have we simply failed to make our case on APD?

Opinion: Have we simply failed to make our case on APD?

By Tom Allen, travel and leisure consultant and founder of Tom Allen Partnerships

A recent poll indicated that the majority of the travel industry thought we should forget about fighting the case for APD reduction, and just move on.

This was followed by lots of noise from APD campaigners, telling tales of petitions, letters to their MPs etc - which got me thinking. Why has the Treasury disregarded them?

On the grounds that the government is in the business of making the right decisions for the economy, then either we haven’t got the message over, or we haven’t made the case.

Much has been made of the study by PwC, on behalf of the airlines, which outlines the case for abolishing APD.

However, as quoted in the Daily Telegraph: ‘a Treasury spokesman said: We do not recognise the figures in this report or agree with the assumptions behind it.’

This strikes me that we have not done a good job of getting the argument in front of the right people.

Is Abta using the correct lobbying tactics? Maybe they are; I am not in a position to judge, but if so it’s clearly not working.

Unless - which brings me to the second, and much more fundamental, point – we do not have a good economic case to present?

If I was working in the Treasury, and George Osborne asked me to look at the issue, I would probably mention:

  • The PwC report was produced for the airlines and therefore has a vested interest in their businesses. Clearly abolishing APD would increase UK airlines’ traffic, but would it help the UK economy overall in these difficult times?
  • The report says that abolishing APD would just about pay for itself in tax revenue, although there are potential substantial other long-term benefits, which would mean the UK economy would be £16 billion better off by 2015.
  • However, there has been no recognition anywhere that any reduction in outbound holidaymakers means an increase in domestic holidays, thereby keeping the holidaymakers’ funds within the UK economy rather than spending them overseas. This oversight undermines the findings.
  • We are getting mixed messages from the airlines who say that increasing airport capacity is vital, but also saying APD is impacting their future growth. I cannot reconcile these two views.
  • The study suggests that abolishing APD will mean an increase in foreign holidaymakers, but again we are getting mixed messages. Visit Britain makes the point that easing Visa restrictions, making them easier and cheaper, is the main way to stimulate overseas holidaymakers. Perhaps, George, we should address this before APD.
  • In terms of business traffic the study goes into some length about how the businessman will travel through European hubs, and give more business to European airlines. Quite frankly, if businessmen want to do business in the UK, they will fly here to do it. How they get here is a commercial decision and should not impact our thinking.
  • For our own UK businessmen travelling overseas, there is no real case made that APD impacts their travelling to any large extent.
  • George, APD is easy to operate and cheap to collect. It brings us in three quarters of a billion pounds per annum, which we need in these difficult times. And abolishing it will not gain us any votes.

I know this is a bit basic, but while there may well be a case for abolishing APD, it is self evident that we have not made it clearly enough, or action would have been taken. Am I wrong?


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