The UK industry coalition A Fair Tax on Flying campaign has demanded a review of APD’s impact on the UK economy and its competitiveness, so far without success.
However, the OECD declined to comment specifically on APD or UK tax policy.
Alain Dupeyras, head of the tourism unit at the OECD centre for entrepreneurship, said: “We are able to show some taxes support tourism. But we are not ready to discuss taxation and competitiveness. The evidence is mixed.”
He added: “We won’t enter a discussion of specific taxes.”
Dupeyras said: “Everybody recognises the benefits tourism brings to the economy. Tourism has gained a little in importance because of the [financial] crisis.”
The OECD report covers the period 2008-12 and Dupayras said: “Tourism showed remarkable resilience during the crisis.” But he added: “Active tourism policies are essential.”
The OECD includes most of the world’s developed economies – the European Union and much of the rest of Europe, Turkey, the US, Canada, Australia, Japan, Korea and Mexico.
Its report notes the industry accounts for 4.7% of GDP and 6% of employment in OECD member countries, which together account for almost 60% of global tourism.
OECD members saw average growth in arrivals of 1.9% between 2008 and 2012. However, tourism receipts across OECD members rose just 0.7%.
The OECD report notes: “Long-haul flights from Europe have fallen … as more people take shorter trips” and “travellers are getting older, with around one in four aged over 55″.
As a consequence: “Attracting more tourists from emerging economies will be key.”
But the OECD warns: “Travellers from these countries are likely to encounter more demanding visa and entry formalities when visiting OECD countries.”
It urges: “Governments should put in place measures that identify and facilitate high volume, low risk, legitimate travellers so they can travel more freely.
Sourced from Travel Weekly
Newly appointed UK market director Sophie Dekkers (pictured) pointed out that even in a record year for profitability for the budget carrier last year the amount made per passenger was £7, up from just £2 in previous years.
APD on short-haul flights is due to rise to £13 in April and there is the prospect that Osborne could signal further increases in the air tax in this month’s budget.
“My role as UK director is to grow easyJet in the UK. We have a new fleet coming in and I will be campaigning to try to secure as many of those aircraft as we can.
“Look at the numbers on commercial performance and other markets perform significantly stronger. APD has a real impact on my ability to challenge internationally and secure aircraft for the UK.
“If we want growth in the UK it would make a big difference to have a complete rethink about how it [APD] is structured and working.”
Addressing guests at the reception, Dekkers quoted the results of a PricewaterhouseCoopers report commissioned by the Fair Tax on Flying campaign.
It concluded abolishing the tax could generate a net gain for the Treasury of £16 billion over three years and create 160,000 jobs.
She said a World Economic Report highlighted how the UK due to having some of the world’s highest air taxes was 139th out of 140 in terms of a key competitiveness indicator.
“It’s hard to find another comparable table on a key measure of international competitiveness which shows Britain in this position,” Dekkers said.
Industry campaigners accept the Treasury is highly unlikely to change its policy on APD that brings in revenues of £3 billion a year and is the second easiest to collect.
However, they believe the high profile Fair Tax on Flying campaign, which has gained support from airlines which are mortal enemies, as well as organisations like Abta, has prevented larger increases.
Dekkers believes the message is getting through to MPs. “I think we are gradually getting there. I think there is a nervousness from the government about how much they are going to lose.
“The PwC report gave us an independent review that abolishing the tax would create additional taxes and cover the losses from other tax revenues.”
Robert Goodwill MP, Parliamentary under secretary for transport, said the government wanted to encourage aviation to grow and that it was investing in infrastructure to aid this.
He said under the current growth forecast the numbers of flyers will double by 2050, meaning Gatwick will be at full capacity by 2020 and Luton by 2030.
“We need to make sure the UK has the connections to prosper. Difficult decisions have been put off for too long.
“We want to see the aviation sector in Britain, with companies like easyJet, opening new routes and creating new jobs and wealth. That’s why we are committed to improving infrastructure over the next couple of years.”
Sourced from Travel Weekly
If Scotland breaks away from the union he expects to see passengers favouring flying from airports in a newly independent nation to avoid Air Passenger Duty charged by the Westminster government.
“Absolutely without question it will happen,” IAG chief executive told The Telegraph, dismissing claims that APD represents only a fraction of a flight’s cost.
“It is that much money to avoid that it is a factor. Anyone who thinks otherwise is a fool,” said Walsh.
“An independent Scottish government has made clear they would abolish APD because they see it as damaging to the economy and that is exactly what we will see – a million people drive to Dublin from Northern Ireland every year to avoid APD.”
Walsh believes airports in the north of England such as Newcastle would suffer as passengers head north, should Scotland become independent.
But he said British Airways would be unlikely to shake up its flag-carrying services to capitalise on this.
“We would look at it but [flights from Scotland] are a small part of the business,” he said, though he added that IAG’s recently acquired low-cost carrier Vueling could move in to take advantage.
Sourced from Travel Weekly
The majority of travel companies have already taken a financial hit due to a tightening of the law stopping families from taking children on holiday during school terms.
A survey of 54 travel firms found that 85% had seen a financial impact on their business since the law changed in September 2013, with 66% saying this had forced them to cut departures and/or staff.
The poll, undertaken by Travelzoo and the Chartered Institute of Marketing Travel Industry Group (Cimtig), also found that seven in 10 felt the government had no right to interfere in the process of taking a family holiday.
It also revealed widespread anger at education secretary Michael Gove, with 67% saying it was “unacceptable” that he enforced the change before consulting the travel industry.
Before the changes, headteachers had the power to allow children up to 10 days’ leave during term time for a family holiday. Parents who do so now face a £120 fine per child outside of “exceptional circumstances”.
Richard Singer, Travelzoo’s European managing director, added: “We’ve seen cases in the media recently where parents have now been fined for taking their children out of school for holidays.
“A quarter of the travel companies we surveyed said that they might have to put prices up during the summer holidays to counteract the drop-off of families travelling during term time.”
Singer has created an online petition on the government’s official website to call for a cut or suspension of Air Passenger Duty (APD) over the summer school holiday period. More than 38,500 people have so far signed it.
Sourced by TTG Digital
By Tom Newcombe,
Former IATA CEO, Giovanni Bisignani, said the UK government must control rising Air Passenger Duty (APD) as it’s having a negative effect on its economy and aviation industry.
Speaking to BBT Bisignani said “it’s a pity” a country that has been so innovative in the industry has a government that doesn’t treat aviation with the “care and attention it deserves”.
“I remember discussing the issue of APD with the previous British government and I tried to delay the process but now the current lot are not taking care of this issue at all.
“This will have a negative effect on the UK economy and the industry. You only have to look at the tickets to see the level of tax – sometimes it’s bigger than the fare which is wrong.”
Bisignani said it is “strange” a country that has done so well in the recovery process still has the idea this is a “business for millionaires”.
“This is a mass mode of transportation,” he said. “But the UK is sticking to the idea that this tax works because rich passengers are flying, it can’t be right.”
The former director general and CEO of IATA was speaking to BBT after the recent launch of his book Shaking the Skies which charts Bisignani’s time at the organisation.
He joined IATA in 2002 and during his 10 year tenure drove significant industry changes. These included making the IATA Operational Safety Audit (IOSA) a condition of IATA membership and introducing e-ticketing. The former contributed to a 58% improvement in safety between 2002 and 2011.
Bisignani also told BBT a third runway at Heathrow is the best option for the UK to improve airport capacity.
Bisignani said the UK economically relies heavily on London and the City of London relies on connectivity, which Bisignani claims is lagging behind parts of Europe and Asia. “The level of connectivity at Heathrow is incredibly low compared to many parts of the world and so a third runway is essential to improve this,” he said.
“The runway at Heathrow is clearly the UK’s biggest problem because it’s operating at 96-98 per cent capacity, so when there’s a storm everything is a complete mess and this must change.”
In 2012, chairman of the Airports Commission, Howard Davies, was asked to investigate the options for increasing aviation capacity in the UK.
In December he unveiled the short-listed options – new runways at Heathrow and Gatwick, and an extension of Heathrow’s existing northern runway.
Sourced by bbt
By Tom Newcombe,
More than 90% of UK travel buyers believe Air Passenger Duty (APD) is ‘too high’, a jump from 45% who thought this two years ago, according to a study published by ITM.
In its annual industry outlook survey of more than 100 UK based travel buyers there was a significant shift in negative feeling towards APD.
In 2012 ITM found 60% of travel buyers thought APD was ‘at the right level’ compared to 10% in 2014.
APD is a duty which is charged on the carriage of passengers flying from a UK airport. The amount of duty charged is calculated using a variety of factors. In its original form the minimum APD charge on a ticket was £5 and the maximum was £40.
Controversially APD has risen significantly since 2007 and the minimum now is £13 and the highest £188.
ITM said APD “isolates” the UK from the rest of the world as it’s one of the only countries which has an environmental tax. It claims this is wrong as none of the revenue from APD is used on environmental measures.
The study found buyers do recognise that businesses need to pay tax in order to see an increase in economic growth.
Buyers were asked about other business travel taxes such as car rental, city taxes and VAT and 55% agreed they were ‘high but understandable’, almost the same as 2012 when 53% agreed with this statement.
The study found 85% of travel buyers are ‘concerned’ about the privacy of both company and personal data. This is up from 45% who said this in 2012.
The study also showed 48% of travel buyers are not in control of the level of corporate travel data information available about their organisation within the travel supplier market place.
Tips for buyers
The study named its top five areas to focus on in 2014:
- Maintain and improve compliance
- Make it a priority to get closer to your travellers
- Make it a priority to get closer to internal stakeholders
- Integrate travel and expenses
- Stay connected with your peers
Sourced by bbt
Martin Evans: Why Sir Howard Davies’ Airports Commission has missed an opportunity to rebalance the UK economy
The topic I have returned to most over the past year has been the work of the Airports Commission led by Sir Howard Davies.
The commission was announced by the UK Government in September 2012 and was set up as an independent body ‘to identify and recommend to Government options for maintaining the UK’s status as an international hub for aviation’.
It was given the task of producing an interim report by the end of 2013 on the short term options for making the best use of existing runway capacity and selecting a short list of options for the long term. The final recommendation for the long term will be published by the commission in their final report in the summer of 2015.
The timing of that final report, coming after the UK general election of 2015, will delight the cynical and fans of the TV comedy ‘Yes Minister’. They might think that the UK Government wanted to avoid a highly political argument over the future of Heathrow Airport just before they wanted to be re-elected.
The commission produced the interim report just before Christmas and for all the diligent work that has been undertaken there wasn’t much new thinking in evidence.
The options for the long term have been narrowed down to a choice between a new runway at either Heathrow or Gatwick. These were the same two options that were favoured by the last UK Aviation White Paper in 2003 except at that time extra runways at Stansted were also included as an option because Heathrow didn’t meet European pollution targets and Gatwick had entered into an agreement with the local council to not build a second runway before 2019.
The much promoted idea of a Thames Estuary Airport (the so called Boris Island) was dealt with completely differently. The commission decided that they didn’t have enough time to undertake analysis that either supported or rejected a Thames Estuary Airport as one of the options. They therefore proposed to undertake further work during 2014 which may or may not impact on the final recommendation in 2015.
Three proposals for long term options from Wales were considered and rejected during the sifting process undertaken by the commission, two proposal for new Severnside Airports and the Western Gateway proposal for Cardiff Airport. Western Gateway had also proposed using existing available capacity at Cardiff Airport in the short term.
The proposals for Severnside Airports fell at the first hurdle, they were rejected as providing little additional capacity given the requirement for both Cardiff and Bristol Airports to close.
The proposal from Western Gateway went through to the second sift along with other proposals that suggested dispersing air traffic from congested airports to less congested regional airports.
Western Gateway was rejected at this stage due to the high cost of the high speed rail links to London and the limited additional capacity and local demand.
I have to say that the commission seem to have missed the point completely. High speed rail links from Cardiff to London need to be built anyway so that South Wales does not compete at a disadvantage with English regions that are getting high speed rail links. If local air passengers were able to use local airports instead of congested airports in the south-east, improved connectivity would encourage more business and leisure use moving economic activity away from the south-east of England and leading to a more balanced UK economy which is becoming more and more London centric.
The commission also disagreed with the mechanism proposed for rebalancing, the devolution to Wales of the power to set Air Passenger Duty (APD). APD is a tax paid by all of us whenever we take a passenger flight on an aircraft with more than nineteen seats. It becomes more and more onerous, the greater the distance travelled.
An argument could already be made that it is an unfair tax, an air passenger in the south east of England pays the same rate of APD as an air passenger in Wales yet incomes in the south east of England are much higher than in Wales leading to APD being a drag on development of air transport connectivity and economic activity in Wales.
The Airports Commission makes two arguments. Firstly that different rates of APD would distort competition between Cardiff and Bristol Airports. To have different policies on both sides of the border is exactly the point of devolved government.
If the UK Government wanted to lower APD for the English regions, that would be a sensible policy decision for them to make, but they might come to a different conclusion to the Welsh Government.
If only long haul APD was devolved as recommended by the Silk Commission, the body set up by the UK Government to examine further devolution for Wales, the impact on Bristol would be minimal. Bristol has infrastructure restrictions that suggest it doesn’t have a big role to play as a long haul airport. Cardiff can undertake that role much better and the Welsh Government should have every tool available to ensure that it comes about.
Secondly the commission suggests that encouraging regional airports by reducing APD would take demand away from the congested airports of the south-east of England, would lead to smaller aircraft size and increased air fares. That argument encapsulates what should be the debate, do we want disadvantaged UK regions just to provide a small marginal benefit for the already prosperous south-east of England?
These questions were way outside the remit of the Airports Commission and probably shows the need for a much larger debate about the unbalanced nature of the UK economy and how transport and taxation measures can be used to address the balance.
Martin Evans is Visiting Fellow in the Faculty of Society and Business at the University of South Wales.
Sourced from walesonline
By Natalie Thomas,
Controversial aviation taxes in the UK must be urgently reformed to encourage economic growth in the regions, says the new boss of airline Flybe.
Saad Hammad, who recently took over as the troubled airline’s chief executive, said infrastructure projects in the UK, such as the proposed HS2 rail project, are too “London centric”.
He argued that Air Passenger Duty (APD), which is levied on all flights that depart a UK airport, is “unjust” as it hits regional airlines such as Flybe harder than other carriers. Regional flights provide a crucial link for those living outside of London and are both faster and more punctual than rail travel.
The aviation boss is urging the Treasury to reform APD so that regional passengers are not unfairly disadvantaged. At present, they pay the tax twice on a return flight within the UK, while passengers flying abroad only pay once. APD is passed on to passengers through their ticket price.
“If the Government is serious about the economic regeneration of the regions, it must do something about APD,” Mr Hammad said. “I’m sure this wasn’t an intended consequence but please, they need to reform this quickly. It’s so wrong at many levels.”
Mr Hammad, who was appointed in August to turn around Flybe after it posted an annual loss of £40.7m, said transport connections in the regions were unlikely to improve through forthcoming rail projects, such as HS2.
“People keep going on about HS2 but it is so focussed on London,” he said. “Where is the investment for the regions? The Government really needs to listen on this one.”
Flybe is in consultation with staff over a further 500 job losses, adding to a previous 600 already made, but Mr Hammad says the company has a future as “the 90-minute airline”, providing connections to regional airports in the UK and Europe that are ignored or under-served by the legacy carriers and the low cost giants, such as easyJet.
“If Flybe didn’t exist, it would be necessary to invent it,” he says in an interview with The Daily Telegraph. “It is a fundamental part of the economic infrastructure of this country connecting the regions. The economic revival of this country can’t solely depend on London and the South East.”
Sourced by The Telegraph
By Oliver Smith
Scottish holidaymakers will pay half as much as their English and Welsh counterparts in air tax should the country vote for independence, Keith Brown, the transport minister, has confirmed.
Mr Brown said Air Passenger Duty (APD), paid by all air passengers travelling from a British airport, including inbound tourists on their flight home, was hindering the economy, and would be cut by 50 per cent in Scotland, with a view to abolishing it altogether.
The move would save a family of four up to £194 every time they fly, and has the backing of the country’s three largest airports – Edinburgh, Glasgow and Aberdeen.
“Travellers flying to and from Scotland this Christmas should be looking forward to seeing family and friends, not worrying about the cost of this unfair tax,” said Mr Brown.
“It’s clear that the current APD situation puts Scotland at a competitive disadvantage when it comes to attracting visitors and businesses from overseas.It’s the most expensive aviation duty in Europe, adding significantly to the cost of flying to and from Scotland.
“Airlines and airports repeatedly cite the UK’s APD as one of the major obstacles when it comes to securing new routes, as well as maintaining existing ones.”
In his Autumn Statement last week, George Osborne, the Chancellor, ignored pleas from the travel industry to freeze or cut the tax, and confirmed that it would rise again – for the sixth time in as many years – next April.
The rises will increase the cost of medium- and long-haul flights (see table below). A family of four travelling in economy to Egypt, the US or Canada, for example, will be forced to pay £276 in APD, up from £268. A family of four flying to the Caribbean, Thailand or India will pay £340, up from £332. One heading farther afield, to Australia or Argentina, for example, must contribute £388, up from £376.
Rates have soared since 1994, when APD was introduced. Then, passengers paid £5 per person to fly to short-haul destinations and £10 to travel farther afield.
Should Scotland vote for independence and go ahead with the cut in APD, it could encourage those living in northern England to fly from Edinburgh or Glasgow airports, rather than English ones.
A similar situation arose in Northern Ireland, where many chose to fly to the US via Dublin, instead of Belfast, putting the city’s solitary transatlantic route under threat. In response, the Northern Irish Assembly scrapped APD entirely on long-haul services.
How the tax on flying has soared Air Passenger Duty paid by a family of four in economy class
|Band A (0-2000 miles) Europe||£20||£40||£44||£48||£52||£52||£52|
|Band B (2001-4000 miles) USA, Canada, Egypt||£40||£80||£180||£240||£260||£268||£276|
|Band C (4001-6000 miles) Caribbean, Thailand, India||£40||£80||£200||£300||£324||£332||£340|
|Band D (6000 miles+) Australia, Argentina, Singpaore||£40||£80||£220||£340||£368||£376||£388|