Chamber & LJLA welcome Heathrow Air Passenger Duty Proposal

Thu, September 21st, 2017

Heathrow urges action on ‘stifling’ aviation tax in new plan for growth

- Chancellor urged to support British industry in Autumn Budget by scrapping uncompetitive aviation tax on internal flights

- Proposal builds on Heathrow’s efforts to improve domestic access to UK’s hub – saving passengers at least £24 million annually on flights to Heathrow alone, boosting domestic journeys by 8% and driving economic growth during key early years post-Brexit making it revenue-neutral for the Treasury

- Proposal forms part of Heathrow’s plans to support growth across the UK by connecting more of the country to the nation’s only hub airport

- Plan also includes support for key surface access links to bring millions more people within reach of the airport via sustainable transport

In a letter to Chancellor Phillip Hammond ahead of the upcoming Autumn budget, Heathrow urged the Government to scrap domestic Air Passenger Duty (‘APD’) on all UK flights after new research from Frontier Economics revealed that UK passengers are paying an extra £225 million in aviation tax on domestic flights compared to many of their European counterparts. The proposal is part of a new 9-point plan unveiled by the airport today – Bringing Britain Closer – which includes “practical, deliverable and binding plans” to connect more of the UK to global growth and prepare the economy outside London for Brexit.

Taxes on a return domestic flight from Heathrow are currently £26 – abolishing them would save UK passengers at least £24 million annually at Heathrow alone, while stimulating an 8% increase in demand which would make many new domestic connections commercially viable for airlines. Heathrow currently has 8 domestic routes and earlier this year cut its domestic passenger charges by third to improve route economics and boost connectivity. Abolishing domestic APD is the next step to helping Heathrow reach its goal of connecting to at least 14 UK destinations once expanded – including the potential for new flights to Liverpool, Humberside and Newquay.

UK APD is the highest tax of its kind in Europe – with most European countries having little to no tax on internal flights to boost their economies and support domestic industry. Abolishing it for domestic flights would level the playing field with Europe. The research from independent economics consultancy Frontier Economics shows that removing APD on all domestic flights would save UK passengers up to £225 million annually and boost the country’s overall GDP by facilitating greater connectivity between regions. The increased tax receipts from this growth is likely to mean that the impact of abolishing APD on domestic flights is revenue-neutral for the Treasury.

As the UK’s global gateway, Heathrow has been an ardent campaigner for improving domestic access to the airport. New and improved surface transport connections like a link to HS2 at Old Oak Common as well as Western and Southern Rail Links will help millions more people to reach Heathrow and help us achieve our goal of at least 50% of airport passenger journeys being made by public and sustainable transport by 2030. Heathrow has also announced a £10 million Route Development Fund to support new domestic flights and is currently reviewing its charges to further support domestic passengers.

Heathrow CEO John Holland-Kaye said:

“Preparing for a post-Brexit economy means this Budget must include practical, deliverable and binding plans to support all of the UK. With an ambitious new 9-point connectivity plan, Heathrow is doing its part to connect all of Britain to growth – it’s now time for the Government to act.

“Abolishing air passenger duty on domestic flights is a bold move that would supercharge British competitiveness, make it cheaper for British businesses to get to London and beyond and ensure every part of our country can prosper in the future.”

Christine Ourmières-Widener, Flybe’s Chief Executive Officer commented:

“Flybe welcomes and supports Heathrow Airport’s campaign to scrap APD on all domestic flights across the UK. Removing APD on domestic flights would help drive UK economic development and mobility, but more importantly would bring down the cost of air travel for the everyday travelling public. As a leading provider of UK regional services and an operator into Heathrow, many of our passengers feel the financial pain of the level of Air Passenger Duty (APD) levied on domestic flights. At worst, APD can account for as much as 50% of a total ticket price when based on Flybe’s lowest fare.”

Mark Povall, Strategy Director for Liverpool John Lennon Airport commented, “An expanded Heathrow would offer the opportunity for unserved UK airports such as Liverpool to have access to the UK’s hub airport for improved worldwide connectivity and to further grow their networks, something that is crucial for generating growth across the whole country, not just London and the south east. However APD remains a barrier to airline growth here in the UK and will undermine the viability of such domestic connections. We naturally support Heathrow’s efforts to lobby for change and scrap Air Passenger Duty going forward.”

Paul Cherpeau, Liverpool and Sefton Chmabers of Commerce CEO commented, “Liverpool & Sefton Chambers of Commerce welcome the proposal to abolish APD for domestic flights to further incentivise connectivity between regions in the UK. APD has become an increasingly difficult expense to absorb within ticket prices, reducing the commercial viability of point to point flights, particularly between London and the UK’s key conurbations in the North. Liverpool has long campaigned for a connecting air-side link to the UK hub airport and the proposed elimination of APD would assist in this aspiration. The issue of APD also has implications to the regional airports neighbouring areas where devolved governments can reduce or eliminate APD, thus creating a distorted market where one airport is subject to a tax whilst another is not.”

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