"Punitive" air tax hike is "worst thing the Government could do" for Newcastle say local businesses

Newcastle International Airport, the airline Jet 2 and the Holiday Discount Centre are among the companies to have signed the letter, in which they tell Dr Cable that, “Here in Newcastle aviation is responsible for sustaining thousands of jobs and Newcastle Airport makes a crucial contribution to the regional economy.” They tell the Business Secretary that “the Government’s proposals to further increase Air Passenger Duty next year, on people departing UK airports, could have devastating consequences on jobs and businesses.”

In the strongly-worded letter sent this morning, they urge Dr Cable, who has Cabinet responsibility for regional growth, “to reconsider the Coalition Government’s policy towards aviation tax” adding that, “as well as punishing holidaymakers, the impact on UK businesses is shocking” with the upshot that any rise in APD “will depress the number of business travellers and tourists coming to Newcastle at the very time we need more inward investment and holidaymakers spending money.”

The Newcastle businesses also tell the Business Secretary that:
• “The UK already levies the highest aviation duty in the world.”
• “The number of international passengers travelling through UK airports has markedly declined in recent years, down from 240m in 2007 to 210m last year.”
• “APD will increase by over 40% by the end of this Parliament – making it one of the UK’s fastest growing taxes.”
• “We urge you to…ensure that air travel, as a catalyst for economic growth, is not further hit by this punitive and damaging tax.”

Dave Laws, Chief Executive of Newcastle International Airport, added: “Air Passenger Duty is a regressive tax. There is no doubt that it is damaging the UK economy, and is hampering our efforts to improve the connectivity of regions like the North East. The government has an opportunity now to intervene and provide an economic stimulus by at the very least freezing the rate of APD.”

Darren Caplan, CEO of the Airport Operators Association, said: “The Government needs to listen to local people and businesses here in North East, who can see the impact of rising levels of passenger taxes for themselves. If the Government goes ahead with its planned double-inflation rise in Air Passenger Duty next week, it risks pricing ordinary people out of the skies and crippling the local economy.”

Air Passenger Duty – key facts:

• The overall APD tax take is due to increase significantly by April 2012, if the Chancellor implements his ‘double inflation’ APD increase.
• The overall tax take is also due to increase when the UK enters the EU Emissions Trading Scheme (ETS) in 2012. Many EU countries are phasing out their versions of air passenger duty to compensate for the revenue to be raised by the EU ETS.
• The UK’s top - or ‘Standard’ rate - is some 8.5 times the average of other countries in Europe which still levy a charge.
• Since 2007, APD for short-haul routes has increased by 140% to EU countries, and for long-haul routes by up to 325%.
• Currently, a typical British family of four travelling in economy class pays £240 more than most European countries to fly to the USA and almost £50 more to fly to Europe. 
• Since the summer more than 17,500 people have already written to their MP calling on the Government to scraps its plans for a double-inflation rise in APD.
• A recent ComRes survey of 150 MPs found that 75% of MPs believe that ‘further rises in aviation taxation may price some people out of flying’.
• In September 2011, 20 cross-party MPs and peers wrote to the Chancellor urging him to re-think his plans.
• By the Department for Transport’s own figures, aviation taxes exceed the sector’s environmental costs by over half a billion pounds every year. 
• Many European countries including Belgium, Holland and Denmark have abandoned their aviation taxes, due to the negative effects on their economies. In the longer-term, analysis shows that the UK economy will forego £750m of wealth and 18,000 jobs due to the recent rises in APD (November 2010), with  around half the extra revenue raised offset by tax revenue losses in the wider economy (source Oxera, 2009)
 
For further information contact:
Luke Law: LukeLaw@aoa.org.uk / 020 7340 0992 / 07827 931480