Heathrow urges action on ‘stifling’ aviation tax

20th September 2017

Posted on September 20th, 2017

Chamber member Heathrow Airport is calling on the Chancellor of the Exchequer, Philip Hammond, to use the Budget in November to scrap domestic Air Passenger Duty.

In a letter to Mr Hammond, Heathrow urged the Government to scrap the tax on all UK flights.

It follows research from Frontier Economics, an independent microeconomics consultancy, which showed that UK passengers are paying an extra £225m in tax on domestic flights compared with many of their European counterparts.

The proposal is part of a new nine-point plan unveiled by the airport today – Bringing Britain Closer – which includes “practical, deliverable and binding plans” to connect more of the UK to global growth and prepare the economy outside London for Brexit.

Taxes on a return domestic flight from Heathrow are currently £26 – abolishing them would save UK passengers at least £24m a year at Heathrow alone while stimulating an eight per cent increase in demand which would make many new domestic connections commercially viable for airlines.

Heathrow currently has eight domestic routes and earlier this year cut its domestic passenger charges by a third to improve route economics and boost connectivity.

It said that abolishing domestic APD would be the next step to helping Heathrow reach its goal of connecting to at least 14 UK destinations once expanded – including the potential for new flights to Liverpool, Humberside and Newquay.

UK APD is the highest in Europe – with most European countries having little to no tax on internal flights, which boosts their economies and supports domestic industry. Abolishing it for domestic flights would level the playing field with Europe.

The research from Frontier Economics showed that removing APD on all domestic flights would boost the country’s overall GDP by facilitating greater connectivity between regions and that tax revenue from that growth would result in APD abolition being tax-neutral for the Treasury.

Heathrow CEO John Holland-Kaye said: “Preparing for a post-Brexit economy means this Budget must include practical, deliverable and binding plans to support all of the UK. With an ambitious new nine-point connectivity plan, Heathrow is doing its part to connect all of Britain to growth – it’s now time for the Government to act.

“Abolishing APD on domestic flights is a bold move that would supercharge British competitiveness, make it cheaper for British businesses to get to London and beyond and ensure every part of our country can prosper in the future.”

Chris Hobson, Director of Policy at the Chamber, said: “The tax on flying makes British businesses less competitive on global markets. The removal of the tax on domestic flights would be a step towards improving our competitiveness so we support Heathrow’s request to Mr Hammond to use the Budget in November to remove APD on domestic flights from all UK airports.”

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