Airlines lukewarm on plans to axe third Heathrow runway and reform tax regime

Britain's aviation industry was lukewarm in its response to policy changes proposed by the newly formed Liberal-Conservative coalition yesterday.

The biggest change of direction is the scrapping of Labour's hard-fought plans for a third runway at Heathrow. Despite support for the scheme from airlines and the business community, the coalition government has backed off from the scheme, favouring green arguments that a high-speed rail link to other UK airports is a more environmentally sustainable solution to over-crowding at the London hub.

The new Government has also put the kybosh on the option of further runways at either Gatwick or Stansted, moving the focus of expansion out of the South-east altogether.

British Airways, which campaigned hard in favour of the third runway, expressed resignation at the death of the scheme. "BA remains of the view that a third runway at Heathrow would have very substantial economic benefits for the whole of the UK," the company said. "The incoming government is aware of our view but takes a different position."

The new Government has also pledged to reform the Air Passenger Duty (APD) regime, changing the tax from a per-passenger to a per-plane levy. The long-held Liberal Democrat policy is designed to penalise inefficient carriers flying half-empty planes.

The APD plan also met a mixed response from airlines. BA said that airlines' inclusion in the EU Emissions Trading Scheme, due from 2012, will do more to address environmental concerns, and warned that more punitive taxes could send valuable transit passengers to European hubs instead.

And although the shift to a per-plane tax will be welcomed by smaller airlines, which tend to run fuller flights, they also stress that the change does not address wider concerns about the unpopular APD regime.

"The two government parties have made a firm coalition agreement to reform the daft APD, which taxes full planes but not empty ones," Easyjet's chief executive, Andy Harrison, said. "It's now time to act and make Air Passenger Duty a fairer and greener tax without increasing the tax burden on the flying public."