BA chief blasts UK

Taxes imposed on the aviation
industry are threatening to destroy it, according to the chief executive
officer of British Airw

“Air Passenger Duty [increases]
reach a new peak at the start of next month. The duty on long haul routes has
tripled or, to some destinations, even quadrupled in four years,” said Willie

The BA chief explained that the
Caribbean is disproportionately taxed and said a family of four travelling from
London to Hawaii would incur an APD charge of £240, (US$382). Yet the same
family travelling to Nassau in the Bahamas, which is not much more than half as
far, pays £300 ($US478) – and double that if they sit in premium economy.

The taxes had been brought in, he
said, as an environmental measure, and yet the revenue from the duty is ten
times the actual carbon cost of the flight. There have been significant
decreases in UK visitors compared to the rest of Europe since November 2009,
although this may also have been in part due to the economic slowdown.

“[But] even if families find the
extra money to pay the tax, they will have less to spend when they arrive here.
So they may stay for shorter periods, eat out fewer times in restaurants, take
fewer excursions and spend less on local goods and services. So this tax not
only massively overstates the carbon impact of flights to the Caribbean, but
threatens the very fabric of the tourism sector – on which so much of the
islands’ economies depend.

“It threatens jobs and
opportunities – and the ability of the islands’ governments to maintain funding
levels for the education, health and welfare programmes they expect to provide
for their citizens. Many other island economies in the developing world find
themselves penalised in the same way,” said the airline chief.

Government revenue

He said that many UK politicians
have said they are sympathetic to the industry’s point, but that has not
translated to action. In fact, the UK government expects revenue to increase from
£2.3 billion this year to £3.8 billion in five years’ time, a 65 per cent increase.

“I do not think passenger volumes
will grow 65 per cent in five years, so further increases in tax rates must be
on the horizon.

“There remains the possibility that
the Government will switch from APD to a per-plane tax, which in many ways
would have even more damaging effects – both economically and environmentally,”
said Mr. Walsh, who added that all airlines coming in and out of the European
Union will be subject to the EU’s emissions trading scheme within 15 months,
which would impose more costs on all airlines.

“Estimates put the total cost at
more than £1 billion (US$1.6bn) a year – and likely to rise by £100 million a
year after that. And the UN’s climate change committee recently suggested that
the global airline industry should pay an annual tax of $20 billion as its
contribution to the $100 billion a year fund proposed at the Copenhagen summit
to assist carbon reduction around the world,” said the chief executive officer.

He said that an important step
would be to ensure that emissions from international aviation are included in a
global climate deal, which he hopes will be negotiated by world leaders at the
United Nations climate summit in Cancun in December. 

Patchwork quilt

The British Airways chief termed it
a patchwork quilt of taxes and said that local tax schemes must be abolished in
order that airlines pay their way equally. The UK cannot do without the tax
revenue, but they must understand the economic impact.

“Enough is enough. This blinkered
policy will have three deeply damaging consequences. First, it will price
millions of people out of flying – especially long haul flying to regions such
as this. Second, the tourism sectors of these islands and many other island
economies in the developing world will be dealt a heavy blow.  I am not sure how much the policymakers have
considered the impact on developing nations in terms of jobs and their ability
to provide social infrastructure, let alone their ability to invest for themselves
in green technologies.

“Third, some airlines will go out
of business. Aviation is a low-margin industry at the best of times. If
surpluses are swallowed up in taxes, airlines will not only be unable to invest
in cleaner, emissions-reducing aircraft, they will ultimately go bankrupt – and
the social and economic benefits they bring will disappear with them,” said Mr.


BA Chief Executive Operator Willie Walsh says the Caribbean is disproportionately taxed.
Photo: File