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”.
My reading of this is that it is special pleading by IAG. Its like when Wetherspoons whinge about VAT on meals out.
APD is high in the UK relative to nearly all other countries, its true. But more generally, aviation is subject to low levels of tax. Airline fuel is not subject to fuel duty (probably because airlines would otherwise do fuel runs to places with lower duty). And tickets aren't subject to VAT either (like other forms of public transport).
APD is a relatively higher share of costs for low-cost airlines and for peripheral aiports (where landing slots are usually free and per-passenger charges lower). But its better to reap the revenues from APD and target support at socially/economically beneficial routes, etc, rather than abolish the tax across-the-board.
And we should be taxing air travel. It is environmentally damaging. We do tax road travel and train travel (even public transport operators have to pay fuel duty, and electricity costs of electric trains would be impacted by climate change levy, etc.).
If they can't make it work given APD, then they just don't have a viable business model.