The Conservative-Lib Dem coalition looks set to scrap APD in favour of a tax per plane, and the chances of a third runway at Heathrow now look slim.
The BBC’s business editor Robert Peston reported in his blog (flagged in our forum earlier today) that the “the Lib Dem policy of taxing planes rather than passengers has been adopted, as one of the coalition’s green policies”.
According to previous policy statements by the Lib Dems the move would see the current Air Passenger Duty replaced with an “Aviation Duty”, levied on planes rather than passengers in order to “provide an incentive for airlines to fill seats and to discourage them from running empty flights”.
This would be likely to benefit low-cost carriers such as Easyjet and Ryanair which operate high density seating models, as well as airlines operating the 500-odd capacity A380 superjumbo. It could also discourage airlines from introducing new routes where high load factors cannot quickly be assured.
Both the Conservatives and the Lib Dems have consistently said they would scrap plans for a third runway at Heathrow. Both parties have expressed their commitment to a high-speed rail network, with the Conservatives saying they would “begin work immediately on a high speed rail line connecting London and Heathrow with Birmingham, Manchester and Leeds, with construction beginning in 2015”.