Airline tax rise threatens low-cost long-haul flights from regional airports, experts claim

IAG says Birmingham, Cardiff, Edinburgh and Manchester could get transatlantic links – if Air Passenger Duty is abolished

Level pegging? IAG's low-cost/long-haul airline may not fly from Britain (IAG)

Birmingham, Cardiff, Edinburgh and Manchester could miss out on new transatlantic links unless Air Passenger Duty (APD) is eliminated, a leading airline group has said.

IAG has written to MPs to say “it’s not financially viable” for the group’s low-cost brand, Level, to fly from those cities with APD at current levels.

The group, which is British Airways’ parent company, says Level’s one-way fares start at £88. Air Passenger Duty for long-haul flights is currently £75, but will increase to £78 for flights from 1 April 2018.

For anything better than basic economy, this rate is doubled.

Willie Walsh, IAG’s chief executive, said: “British consumers are losing out because of APD. In Spain and France, Level can offer lower fares than it can in the UK – and that goes for other long-haul low-cost airlines too.

“MPs need to know that APD undermines our ability to introduce new low cost flights that would benefit their constituents. If APD was axed, IAG could open new routes and operate Level from regional airports.”

The letter from IAG says for a trading nation reliant on developing international connections post-Brexit to tax aviation so harshly is “foolhardy”.

After the April 2018 increase, basic APD is to be frozen up to 31 March 2020 – but in premium classes it will rise from £156 to £172.

Mr Walsh added: “By hiking APD in the last Budget, it’s clear the Chancellor doesn’t understand that Britain is losing out to countries that don’t have draconian aviation taxes”.

At the time of the last Budget, the Treasury said: “This measure freezes short-haul and reduced long-haul APD rates for the tax year 2019 to 2020 and therefore keeps costs down for the vast majority of passengers.

“Overall revenues from APD continue to rise in line with the retail prices index (RPI) helping to contribute towards general taxation.

“This measure is expected to have a negligible impact on approximately 800 airlines and aircraft operators.”

Air Passenger Duty was introduced by the then-Chancellor, Kenneth Clarke, in 1995. Cuts to APD were made in 2015, shortly before the General Election.

British Airways used to fly transatlantic services from Birmingham, Manchester and Glasgow. The last regional route, from Manchester to New York JFK, ended in 2010. It has recently introduced a limited number of short-haul services from regional airports.

Norwegian, BA’s low-cost long-haul rival, has said it plans an ambitious programme of expansion from Gatwick.