News: Flights tax set to double

Flights > News > # 1106 (07/12/2006)

Air Passenger Duty on flights is set to double in February.
The duty on short-haul flights will rise from return from £5 to its pre-2000 level of £10, the tax on all other flights will go from £20 to £40.
Chancellor Gordon Brown announced the news in his pre-budget report yesterday (December 6).
The decision to raise aviation duty came in for criticism from both sides of the green divide. British Airways said Air Passenger Duty is an extremely blunt instrument that provides the Treasury with extra funds for general public expenditure without any benefit to the environment.



A BA spokesman added: “Further taxing hard-working families and British businesses is not the way to address climate change. Unlike other transport sectors, UK aviation pays for all its own infrastructure and security. “This hike in Air Passenger Duty is revenue-raising pure and simple with aviation being treated as a cash-cow.”
No-frills giant Easyjet was equally scathing of the chancellor’s tax hike. Easyjet said the Government was backtracking on a statement it made in 2003 that Air Passenger Duty was not the ideal measure for tackling the environmental impacts of aviation.
An Easyjet spokesman said: “Gordon Brown recognises that not all cars pollute the same, but his Air Passenger Duty proposals are flat-rate and do not incentivise airlines to operate the cleanest aircraft. If he is far-sighted when it comes to road vehicles, why is he myopic when it comes to aircraft? His proposal for Air Passenger Duty bears none of the hallmarks of an efficient environmental tax and all the hallmarks of a Chancellor keen to raise stealth taxes.”
However, Friends of the Earth argue the increases are not sufficient to tackle aviation emissions. A statement on the environmental group’s website said: “Larger increases are needed, and a commitment to year on year increases to prevent the continuing falls in the overall cost of flying. These falling costs are driving massive airport expansion programmes across the UK.”

Comment:

Well, we knew it was coming, the one major tax which Gordon Brown has cut is finally going to get re-stealthed, but how utterly unimaginative can he get?

The government's own Future of Air Transport White Paper, published just three years ago in December 2003, acknowledged that blanket taxes on aviation were a very inefficient way of providing any meaningful reduction in environmental impact, describing air passenger duty as "a blunt instrument."

So is this move just the latest development in the environmental policy arms race which is rapidly developing between the three main political parties, or another vain attempt to appease the green lobby? Unsurprisingly, as always, they will never be satisfied, with Friends of the Earth already having branded the latest tax increases as tokenism. We’re not quite sure what part of doubling they don't understand, but perhaps a new look at the maths on short-haul flights might put things in perspective:

According to the Climatecare website, which uses figures provided by the government to work out the real carbon cost of flying, and other polluting activities (the train is of course conveniently excluded), the carbon cost of a return flight from London to Scotland currently stands at £1.08, meaning that the proposed new air passenger duty of £10 each way, which will be levied twice on internal flights, will cover this cost by a factor of almost 20.

One of the biggest criticisms the environment lobby have levied at the aviation industry is that airlines have been artificially flooding the market by virtually giving away flights. However, whilst little attention is drawn to the often exorbitant prices no-frills airlines charge for late bookings. It is certainly true that no-frills airlines have brought down prices and stimulated the market, but it is only thanks to deregulation that they have been able to do this. The lead-in prices which environmentalists hate so much have little relevance to an airline's overall balance sheet, but they do provide opportunities to fill seats which would almost certainly be left unsold under more traditional pricing regimes. At the lowest pricing point, airport charges and passenger duty already make up the lion's share of the cost of the flight, so adding on another £5 on each flight departing from the UK is most likely to deter passengers who airlines can afford to lose anyway. All it will mean is that at off-peak times, these airlines will become a lot less efficient, flying with more empty seats, and burning up significantly more fuel per passenger.

There are numerous alternative ways of making airline passengers pay for their environmental damage which are much fairer, and significantly more effective, than raising air passenger duty.  Although no airline is going to put its hand up and ask to be penalised, there is a general industry consensus that emissions trading is the fairest system, whereas a duty on aviation fuel, whilst being strongly opposed by most airlines, would at least provide a much more direct incentive towards further efficiency gains. 

So why has Gordon Brown opted to increase air passenger duty now, having reduced it himself back in 2000? It certainly looks like we have a Chancellor who wants to be seen to be green, and who wants to stamp his authority on an issue which will otherwise be dealt with in Brussels. Of course, the great irony here is that because carbon dioxide emissions are a global concern, and because aviation is a generally international business, this is one of the few issues which even the most ardent Eurosceptic should accept is best dealt with through an international consensus, rather than by one country acting unilaterally. However, as we all know, the European political process is notoriously to slow to act. Any imposition from Europe is most likely to apply to the airlines as businesses, rather than the individual passenger, and we can't help thinking that this simply doesn't satisfy the huge mothering instincts of New Labour's nanny state.