Mounting pressure is being brought by airlines and the United Kingdom travel trade onto the British Government to suspend, lower the rate or eliminate the Air Passenger Duty (APD), often referred to as ‘the highest rate of tax in the world on air passengers’. A statement from the UK Treasury has confirmed that a consultation on aviation tax reform would take place and hinted that APD could be suspended in the autumn budget amid increasing pressure to provide respite for airlines and the wider industry.
According to the Daily Mail, ‘at least 24 Members of Parliament (MP’s), including the chairman of the influential 1922 committee, Sir Graham Brady, are pressing chancellor Rishi Sunak to suspend APD until the end of summer 2021’. A suspension would allow airlines to entice holidaymakers with cheaper fares and save many of the 600 air routes lost as a result of the pandemic. MP Henry Smith, whose constituency includes London’s second airport, Gatwick, stated that ‘if we maintain our levels of air passenger duty, it will become a tax on recovery, as flying is the only viable route for investors and business people to approach and service existing markets’. The UK and Ireland Managing Director of Travel giant TUI, Andrew Flintham, warned ‘that many companies would not survive unless the current blunt approach was changed ‘ adding ‘if we enter the winter season without sensible solutions, the outlook only gets worse’.
Quite frankly, it defies logic, that our policymakers have not seen fit to temporarily reduce or eliminate the not one, but two, departure taxes plus VAT (Value Added Tax) on air tickets, together with removing the various additional tourism taxes and levies imposed before or from October 2018.
Looking at the cost of airfares from the UK to Barbados during this November as an example, where the lowest priced return economy ticket can still be purchased for as little GB Pounds 374. Over half (52 per cent) of that amount is made-up in taxes inflicted by both Governments. The APD element starts at GB Pounds 80 per person and the UK passenger service charge of GB Pounds 40.87. For the Barbados section, what Virgin Atlantic describes as Airport Service Charge of GB Pounds 52.70 plus a further Passenger Service Charge International of GB Pounds 20.70
So it does not take a rocket scientist to figure out what a massive difference a reduction in these add-on opportunist taxes could make in people’s economic ability to travel to our shores. The rationale is endlessly obvious. If you deter potential visitors in the first place by extracting high levels of taxation, then you obviously cannot collect further taxes on their accommodation, car rental, restaurant dining, shopping, activities, attractions, and so on.
While airlines across the globe are grounding hundreds of aircraft, slashing thousands of employees and fighting for their very survival, it seems almost incomprehensible that Governments are still extracting over half the cost of airfares in taxes.