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Proposed Air Passenger Duty cut sends the wrong signal

18th March, 2021

Ever since it was first introduced in 1994, the aviation industry has been lobbying for the Government to scrap Air Passenger Duty – a tax levied on passengers (other than children and those transferring from one flight to another) departing UK airports. Every so often we’ve said why we think this is wrong-headed. But on 10th March, Boris Johnson said that one measure he’d like to see implemented in response to a review of connectivity within the UK would be a halving of APD on domestic flights. Has decades of industry lobbying finally worn down the Treasury?

It was certainly not the kind of aviation policy announcement we’d been hoping for. A draft policy on how to achieve ‘net zero’ aviation in the UK is now more than a year overdue. We’ve had promises that the Government will ‘build back better’ from the pandemic. The idea that tax rises – rather than cuts – would be a fair policy for cutting aviation emissions when the sector reopens has been endorsed both by NGOs and by the Climate Assembly (a body set up to reflect the British public’s view on how to achieve net zero emissions). And the public mood seems to have shifted a bit towards the idea of holidaying close to home. 

To then hear that the Government thinks a good way of supporting UK tourism is to encourage people to fly to their destination is pretty deflating. As many press commentators pointed out, in the year of the COP being held in Glasgow, the UK needs to be building its reputation as a climate leader. This kind of announcement makes its protestations about delivering a green industrial revolution ring hollow. 

Is it possible though that this actually had more to do with ‘union’ politics that anything else? APD seems to have been a longstanding concern of the Northern Ireland government, such that in 2017 when the Conservatives needed support from the DUP to get a parliamentary majority, one of the conditions was that they would carry out a review of the impact of the tax on Northern Irish tourism. In announcing the plan last week, which would seek to put domestic flights (on which APD is currently levied at both ends of the journey) on the same tax footing as international flights (for which passengers are charged only on flights departing the UK), Boris Johnson said “It seems wrong that someone flying from Belfast to London and back pays more UK tax than someone flying from Dublin to London and back”. 

Asked about how the proposal squared with the Government’s climate commitments, Transport Secretary Grant Shapps said that total revenues from APD would be maintained, suggesting that rates could be increased on longer routes to make up the shortfall. And the proposal will in any case be subject to consultation as part of a Treasury review of aviation taxes – another long-promised document that will, we hope, include options for reforming and increasing aviation taxes to better reflect the sector’s environmental impact. 

We’re looking forward to engaging with the Treasury about that consultation. As argued in a report to the CCC in 2019, flying is currently both the quickest and cheapest way for someone to increase their carbon footprint. Historic exemptions from both fuel duty and VAT keep air fares artificially low. The Government now faces challenges both of rebuilding its depleting public finances and of delivering its promise to decarbonise transport – including aviation. It’s high time to look again at how to ensure the aviation sector is paying for its climate change costs.