Airport tax consultation a 'sham'

Government consultation on the air passenger duty (APD) airport departure tax was "a sham and a waste of taxpayers' money", airline chiefs said today.

In last week's autumn statement Chancellor George Osborne confirmed an 8% rise in APD from next April.

Today, the Treasury released its response following consultation on APD, which is vehemently opposed by airlines.

Despite pleas to reduce, scrap or amend APD, the Treasury said the system would carry on as it is.

In a statement, the bosses of easyJet, Ryanair, Virgin Atlantic and British Airways parent company IAG, said: "The Government's consultation on APD has been a sham and a waste oftaxpayers' money.

"We are left with a tax that has already cost 25,000 jobs, is doing increasing damage to the prospects for economic recovery, and sends a message to the world that Britain is a difficult and expensive place to do business."

They went on: "We are united in calling for the Government to commission an independent study of APD's overall economic value and impact. We have no doubt this would confirm that APD's negative effect on UK GDP (gross domestic product) significantly outweighs its revenue benefit for the Treasury.

"We call for this tax on passengers to be axed."

Under the new rates from April 2012, passengers in economy class flying no further than 2,000 miles from the UK will see their APD rise from £12 to £13.

In the next band up - covering flights from 2,001 to 4,000 miles - economy passenger APD will rise from £60 to £65, while those flying economy on trips between 4,001 and 6,000 miles will see their tax rise from £75 to £81.

APD for economy passengers on flights of more than 6,000 miles (such as trips to Australia) will find their APD rising from £85 to £92 in April 2012.

APD for passengers in business class and first class will range from £26 on the shortest trips to as much as £184 on the longest ones from April.

Mark Tanzer, chief executive of travel organisation Abta, said: "The Government has rejected all common sense recommendations from industry to reform this tax and gone ahead with a 10% increase.

"For the Government to completely ignore all recommendations after a lengthy consultation is extremely disappointing."

He went on: "The Government has missed an opportunity to make this tax fairer and instead has increased the burden on British businesses, passengers and popular destinations, such as the Caribbean that are caught by unfair banding.

"If the Chancellor believes that tourism is critical to boosting growth in the UK economy, he needs to give the industry a break and reconsider these decisions."

The Board of Airline Representatives in the UK, which represents 86 carriers, also expressed disappointment.

Chief executive Mike Carrivick said: "The Treasury has completely ignored the expert opinion of the aviation and travel industry and is digging its head in the sand over what it knows is a flawed tax.

"Treasury has either deemed matters too complex or that changes would disadvantage others - in that case, why bother consulting?"

Airport Operators Association chief executive Darren Caplan said: "The plan by the Chancellor to increase APD further is bad for jobs, bad for growth and bad for passengers."

British Airways said the APD rise meant it was reducing by about half the 800 jobs it had hoped to create next year as well as causing a postponement of plans to bring an extra Boeing 747 into service next summer.

BA chief executive Keith Williams said: "The Government talks about creating the conditions for jobs and growth - but the reality is the opposite. Its tax policy, which is uniquely hostile to aviation, is costing jobs and growth at BA.

"The rises in APD have left us with no alternative but to cut back on our planned recruitment. Many of these opportunities would have been for young people. At a time of high unemployment for new graduates and school-leavers, it is deeply regrettable that these additional tax increases have propelled us into this decision."

One of the anomalies of APD which opponents have wished to see ironed out is that passengers on a flight of almost 12 hours to the west coast of the US pay less APD than those on, say, an eight-hour flight to Barbados in the West Indies.

Ricky Skerritt, chairman of the Caribbean Tourism Organisation (CTO), said: "Today's announcement on the APD is a slap in the face for all Caribbean people.

"It dismisses all of the research and information we provided to the British Government over the past three years, and it contradicts the message sent by Chancellor Osborne in March 2011 when he cited the discrepancy between the USA and Caribbean APD rates as one of the reasons for holding a consultation on reform of UK APD.

"The Caribbean is the most tourism-dependent region of the world and the British Government's decision totally ignores the negative effect that APD is having on our economies and the Caribbean's business partners in the UK travel industry."