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Labour challenges industry demand to suspend APD

The Labour Party has challenged industry demands for a suspension of Air Passenger Duty (APD) and claims that the tax is a barrier to flying.

Jim McMahon, Labour shadow transport secretary, said he disagreed with calls for the Treasury to forego tax revenue after spending so much to combat the Covid crisis.

McMahon told an Airport Operators Association (AOA) online conference: “The Treasury will be under such financial pressure that calling for it to forego tax revenue is the one area I disagree with the association.”

AOA chief executive Karen Dee told McMahon the industry call to suspend APD is “one mechanism to rebuild connectivity” and stimulate demand.

But McMahon said: “It is quarantine and uncertainty that are preventing people taking flights not financial pressures.

“I’m not convinced APD is a barrier to the consumer. You can fly to Europe cheaper than you can get from Manchester to London. It is quarantine and uncertainty that are the barriers.

“Far better we resolve the issue of testing and have proper travel corridors and [the Treasury] retain APD money to reinvest in the sector.”

However, McMahon was highly critical of the government. He said: “It’s inconceivable the government is not taking more action to protect the industry. Warm words must be turned into action.

“Tens of thousands of jobs have been lost that could have been saved. There has been the blunt toll of a 14-day quarantine and uncertainty around the furlough scheme.

“On top of this, there is the failure to take action on business rates relief for the sector and the decision to remove duty-free on non-EU flights. The government must do far more.”

He warned: “I’m fearful the government is taking a survival-of-the-fittest approach.” For example, he said: “It is likely Manchester Airport will come out of this crisis unscathed, but what about Liverpool, what about Leeds Bradford?

“I’m staggered the government has not had more of an international leadership role on testing.

“We could have a pre-departure testing regime in place here in the UK before people travel, say to Spain, and testing in Spain before people return.

“The government came to the table too late on this. Airports have been offering the government solutions on this.”

However, McMahon added: “Testing will not take away quarantine of course, it will reduce quarantine.”

Dee told Travel Weekly: “APD is not a barrier to passengers. It is a barrier to route development. It makes the UK a less attractive place for airlines to base a fleet. It’s a barrier to making routes commercially viable.

“It could be an important contributor once we are in recovery mode.”

She added: “Jim McMahon hinted Labour is minded to look at different ways of using the revenue [from APD].”

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