Airlines’ dismay at Treasury APD statement

6 Dec 2011 by BusinessTraveller
The bosses of Easyjet, Ryanair, IAG and Virgin have called the government’s response to the consultation on reform of Air Passenger Duty “a sham and a waste of taxpayers' money”. The Treasury has today released a response to the recent consultation on the reform of APD, confirming the decision made in the Chancellor’s Autumn Statement that next year’s double increase will go ahead (see online news November 29). The 27-page document states the consultation received over 500 responses from the aviation sector, domestic and international tourism, other business sectors and consumers. The Treasury said that the consultation “raised a number of specific questions on the future structure of APD, whilst stressing the need to maintain revenues from the aviation sector”. The response highlights changes to the tax including its extension to include business jets, and the cut in rates for passengers departing airports in Northern Ireland. However no changes have been made to the current banding structure depending on distance travelled, variations in the charge for regional airports, or the treatment of premium economy passengers within the higher rate of APD. On the latter point, the Treasury stated that: “Any attempt to define premium economy for taxation purposes would... increase the complexity of the tax. This would also lead to greater administrative burdens for both the industry and HMRC. In addition, the Government notes that any attempt to define premium economy by seat pitch would inevitably discriminate between similar products offered by different airlines, including some and excluding others.” In response the CEOs of Easyjet, Ryanair, IAG and Virgin have released the following joint statement: “The Government's consultation on APD has been a sham and a waste of taxpayers' money. "We are left with a tax that has already cost 25,000 jobs, is doing increasing damage to the prospects for economic recovery - and sends a message to the world that Britain is a difficult and expensive place to do business. “We are united in calling for the Government to commission an independent study of APD's overall economic value and impact. We have no doubt this would confirm that APD's negative effect on UK GDP significantly outweighs its revenue benefit for the Treasury. “EasyJet, IAG, Ryanair and Virgin Atlantic call for this tax on passengers to be axed.” In addition British Airways has released its own statement, saying that the confirmation of the rises next year “is completely at odds with the Government's declared aim of creating the foundations for growth”. The carrier said that the hikes meant it would have to halve its plans to create 800 new jobs next year, and that it would also have to postpone plans to bring an extra Boeing 747 into service next summer. To read the HM Treasury’s statement in full, click here.
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