IAG boss ups the ante on APD

IAG boss ups the ante on APD

International Airlines Group chief executive Willie Walsh launched a withering attack on the government as he and industry bodies repeated calls for Air Passenger Duty to be scrapped across the UK.

The British Airways parent company, the British Air Transport Association and the Association of Airport Operators all urged the government to abolish APD in separate responses to a Treasury consultation on APD devolution.

IAG described government proposals to mitigate the damage to English airports of devolving APD to Scotland and Wales as lacking substance and credibility. The proposed options are “complex and unworkable”.

Walsh said: “The Treasury has finally acknowledged that partial APD devolution will not work and these options are just a smokescreen.

“This is an exercise in futility. APD should be scrapped across the UK otherwise we end up with a domino effect at airports as passengers drive across the country seeking cheaper flights.

“The northern powerhouse will be seriously undermined as passengers flee northern airports.

“Scotland and Wales know that scrapping the tax on flying will boost their economy. How can it be fair for English travellers to carry on paying this tax?

“The idea that you can resolve this by allowing local authorities to raise their own mini-APDs is laughable. It is time to scrap this tax.”

IAG highlighted a study by PwC which found that scrapping APD would boost the Britain’s economy, lifting GDP by 1.7% and creating 60,000 new jobs by 2020.

The Treasury paper, published on the day of the summer Budget in July, set out three options for supporting English regional airports from the impacts of APD devolution to Scotland and potentially Wales.

The three options have been rejected by UK airlines due to their significant flaws, questionable legality and a failure to tackle the fundamental problem of APD being the highest tax on flying in Europe and one of the highest in the world, according to Bata.

Chief executive Nathan Stower said: “The Scottish government’s commitment to reduce the burden of APD by 50% from 2018 is great news, but it creates a new inequality for passengers living right across the UK and a competitive challenge for England.

“The Treasury is right to recognise that devolution will require a policy response in England, but the options in their paper are simply inadequate.

“Passengers living in London and the south-east should not have to pay more tax to fly for business or leisure than passengers living in Scotland, Wales or any other region in England for that matter.

“Luckily there is still time to put other options back on the table for consideration, including abolition and significant reductions of UK APD, that would be fairer to passengers across the UK and improve international competitiveness.”

AOA chairman Ed Anderson said: “Airports across the country are understandably concerned about the distortionary effects of a reduction in APD in Scotland, and the impact that this will have on their businesses and on the regions in which they serve.

“We now have a concrete commitment from the Scottish government that it plans to start reducing APD by 50% from 2018 onwards.

“The UK Treasury will not be able to say that they were not warned that this is going to happen.

“In light of the promises that both the prime minister and chancellor made during the recent general election campaign that they will not allow airports and regions to be adversely impacted by the devolution of APD, it is incumbent upon them to ensure that action is taken sooner rather than later, so that the industry can start planning for the future with a degree of certainty. Doing nothing is simply not an option.

“With respect to what decision the government ultimately takes, the AOA maintains that any reduction in APD in Scotland should be matched, immediately, by a cut everywhere, so that no part of the UK is disadvantaged in any way.”

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