The Air League

With the airlines of Europe not exposed to the high levels of taxation on travel that the UK market endures through APD, the decline in trade through UK major hubs has begun. Signs are showing that we are now at the tipping point for this tax. Unchecked the generation of income for the exchequer across UK industry will start to decay with
potentially catastrophic consequences for the airline industry and the wider UK economy. For an economy that is heavily reliant on business traffic to and from the financial centre of London and with other significant technical industries and institutions reliant on a flourishing and diversely connected aviation industry, now is the time for action.

Although government forecasts from APD predict £2.8bn for the coffers in 2012 and £3.6bn by 2016, the generation of wealth and jobs for the nation could far exceed these totals for the exchequer if aviation is allowed to innovate; in the process creating more jobs primarily for the young unemployed of Britain. A major airline of the UK stated publicly last week that the effect of the increases in APD has reduced their ability to expand, with 400 – 800 new jobs put on hold for 2012 as a result of forecast traffic levels. They have attributed this directly to passengers being driven abroad as consumers link into long haul flights from mainland Europe where government taxes on tickets are minimal. The Netherlands completely scrapped their APD a couple of years ago as a direct result of a loss of traffic for Amsterdam Schipol Airport, which saw a fast recovery in traffic numbers when the tax was removed.

The Air League fully supports the desire of Her Majesty’s Government to drive down the deficit and return the UK to an even balance sheet and sustainable growth. We therefore call on HMG to commission an independent review of the effect of APD on the economic wealth of the UK. In its current form, APD does not only threaten the expansion and ability of UK airlines to remain competitive in the global market, but the very high tech, financial and tertiary industries on which the UK recovery is based will risk being sidetracked as the UK will be seen as an expensive place to conduct business.

In 2004 APD was envisaged as an “environmental tax” for aviation. Subsequent innovation and development has seen UK airlines and the airline manufacturers associated with these operators taking a global lead in addressing their environmental commitments. APD has not kept a pace with this innovation and is no longer fit for purpose. With ETS on the horizon there is now a viable solution in sight to assist all in addressing environmental concerns. Therefore we re-iterate our request to the government. For the benefit of the UK economy commission an independent full review of the current system. Focus on growth of the entire economy and innovation in terms of environmental commitment. In doing so you will enable the UK to compete on a fair playing field in what, due to deregulation, is now a truly global industry. As a nation we have an aerospace industry we can be proud of, allowing it the opportunity to compete, develop and evolve will secure the future of a valuable contributor to UK coffers and in the process ensure we maintain our position as world leading in aerospace, finance and high tech industries.