This week Virgin Atlantic’s boss Steve Ridgeway had a further pop at Air Passenger Duty following the disclosure by the Office of National Statistics (ONS) about the amount that passengers are being charged by this regressive tax, writes John Barrington-Carver. A further inflation-busting 8 per cent increase was added (to come in on 1 April) this week on top of the huge rises introduced with the four-band mileage rates in November 2010 and 2011.
“Any further rises could be hugely damaging for UK business and tourism, as while APD has been steadily climbing since 2007, the number of visitors coming to the UK by air has fallen by 15%,” said the airline.
Given that APD is charged on all flights out of the UK regardless of whether the passenger is an overseas tourist or business person travelling home, it’s not too surprising that a report by Amadeus, the airline central booking system, seems to suggest Olympic visitors have wised up to the tax.
The figures show that Londoners appear more likely to remain in the city during the Games than to leave – for example to rent out a property and have a holiday elsewhere. Thus, outbound travel from the capital’s five airports is set to fall by 11 per cent. That’s one factor but Olympic visitors may have cottoned on to the fact that APD is charged on flights out of the UK. This is a major price factor for long-haul visitors.
UK airports have certainly seen a hike in bookings as might be expected due to the Olympics and it’s not surprising that flight bookings made so far show that arrivals at London airports are up by 31 per cent.
What are interesting are the stats that show that airport arrivals at European cities with high-speed rail links to London are registering higher-than-normal air arrivals, suggesting combined air-rail travel is popular.
Brussels’ airline arrivals are up by 18 per cent more than London airports at 49 per cent; Amsterdam up by 28 per cent and Paris up by 5 per cent – and Amadeus calculates that without the Olympics, the French capital would suffer a huge decline compared to last year.
These stats suggest that overseas visitors are taking advantage of the rail link to avoid paying APD long-haul rates. Return trips from London of more than 6,000 miles will cost £92 per passenger for an Economy seat and an eye-watering £194 for a Premium Economy cabin seat. Although the industry, as well as Caribbean destinations, have lobbied the Government to reduce the tax, only Northern Ireland has successfully achieved a reduction.
APD from Belfast to the US is now charged at (the post-April figure) £13 Economy and £26 premium rates. The reason? Passengers were slipping across the border to Dublin for their trans-Atlantic flights to avoid the (pre-1 April) rates of £60 and £120. This obviously caused a “me too” outcry from other UK regional airports, but to no avail.
Unfortunately, despite independent studies which suggest that APD is harming the UK economy and jobs, the Treasury is unlikely to bend to public and industry pressure to reduce or ideally remove the tax. It’s just too good a revenue earner!
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