It is time to ground this unfair tax on airline businesses
AIR Passenger Duty (APD) has always been an unwelcome tax on hard-working people flying on holiday. It also nearly cost 2,400 UK jobs at Flybe, which was saved last night in a Government rescue deal.
If the Prime Minister wants to deliver on his pledge to improve transport connections between UK regions, he must waive this tax and encourage competitiveness.
UK carrier Flybe stood on the brink of collapse thanks to the massive burden of a tax that is not imposed on either rail or coach passengers. Some £106million of tax was due this year but last night the Government agreed to discuss deferring it for three years.
Last year, Flybe accounted for 38 per cent of all UK domestic flights and eight million passengers. Owned by a consortium of Virgin Atlantic, Stobart Group and Cyrus Capital Partners, it’s a major player in Boris Johnson’s commitment to improving infrastructure within the UK.
ITS route from London to Cornwall is so important it is already part subsidised by the Government. Other routes may be commercially unviable but are necessary nevertheless.
Fast travel between major cities in the UK is vital for encouraging business. Of course, no private company should be immune from going bankrupt and the Government’s reluctance to intervene had been understandable as it could encourage other failing businesses to seek rescue with taxpayers’ money.
Yet this is not a case of a bad business model but an overburdensome tax harming the ability of a company to survive.
It’s the same affliction harming the high street when out of date business rates are the last straw for many traders.
Tax needs to be tailored to provide a level playing field and APD is distorting the market. Air passengers pay £26 per person in APD for a domestic return journey – and higher rates for longer flights abroad. It’s levied each time an aircraft takes off from a UK airport, so hits domestic carriers especially hard. In total it generates £3.7billion for the Government.
That’s a lot of money coming out of the air industry and it’s not just the air companies that are suffering. More than 25 UK regional airports serve Flybe, employing thousands of people in ancillary services, and their competitiveness with other European airports is also damaged by this unnecessary tax. Boris Johnson would be right to cut the tax across the entire air industry to help all passenger carriers.
It is no surprise that environmental activists are up in arms over this, with Greenpeace saying it would be a “shocking decision” as flying is high in carbon emissions. They want to see more taxes on flights so that only the rich can afford to go abroad on holiday.
Not only is that wrong, attacking the poorest in society, but it is also a massive hurdle for business. It would be wonderful if we could all cycle to work or catch a train for a meeting.
But sometimes business people need to attend meetings quickly and efficiently, not dawdling along on a journey that takes a day rather than an hour to get there.
Brexit Britain must decide whether it is open for global business or not, preferring to pull up the drawbridge in pursuit of a carbon neutrality that shackles enterprise and loses jobs. It is simply a question of striking the right balance between protecting the environment but also enabling us to work hard and create a prosperous society for all.
Constant catastrophising about climate change adds very little to what should be a measured debate.
Honouring the working people who backed Boris in the election means improving our transport network across the UK. It is the first element in triggering new areas of industry in left-behind regions.
In the US, President Donald Trump is having great success with his Opportunity Zones attracting businesses to rundown parts of the country.
HE’S not using subsidies to do this but tax breaks. By slashing the fiscal cost of setting up companies in struggling areas, he is attracting top names away from wealthy San Francisco to dilapidated Baltimore.
Downing Street advisers are said to be studying these schemes closely but the key message is that targeted tax cuts can work miracles in stimulating our economy.That counts as much for transport as anything else and it is high time that the burden of APD is removed. Industry leaders have called APD a “tax on Global Britain”.
On TV yesterday the Prime Minister said: “We see the importance of Flybe in delivering connectivity across the whole of the United Kingdom.”
Last night, he began matching those words with action.
‘Fast travel between major cities is vital for encouraging trade’