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EUROPE: "European buy-out market peaks in first half". 4-page article by Deloitte.
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backEUROtalk February, 2012
TRAVEL: U.K. Confirms Air Passenger Duty Increase, Maintains Structure
The U.K. government on April 1, 2012, will increase by about 8 percent the air passenger duty levied on passengers departing U.K. airports. The new charges will range from £13 for tickets on the shortest routes in the lowest class of travel to £184 for the longest routes flown in all other classes of travel. The announcement of the increase came after a public consultation process and followed a plea last month from chief executives at British Airways, easyJet, Ryanair and Virgin Atlantic to ditch APD entirely.
In a response to the consultation, issued today, Her Majesty's Treasury concluded that the APD structure—in which passengers are charged based on the distance flown and class of service—will remain unchanged.
"Many favored a reform based on moving to two distance bands, whilst others expressed support for the alternative three-band structure or retaining the existing four bands. Other ideas included the suggestion of moving to a single rate of duty and alternative models based on more distance bands," according to HM Treasury. "The government recognizes that no banding structure will be entirely free of anomalies" and therefore opted to keep intact the existing four tiers.
The government also noted that some stakeholders argued against maintaining class-of-service distinctions, which they suggested have "a disproportionate effect on premium economy passengers, making it hard for airlines to market and sell the product." Moreover, "a number of stakeholders argued that the typical premium economy service was closer to economy than business class," according to the consultation response document. HM Treasury therefore concluded that "any attempt to define premium economy for taxation purposes would therefore increase the complexity of the tax."
Following the publication of the consultation response document, the U.K. airline chief executives—Carolyn McCall from easyJet, Willie Walsh from British Airways parent IAG, Michael O'Leary from Ryanair and Steve Ridgway from Virgin Atlantic—jointly issued a statement calling the ADP "a sham and a waste of taxpayers' money." They added that the ADP "sends a message to the world that Britain is a difficult and expensive place to do business" and that they "have no doubt" an independent study would "confirm that APD's negative effect on U.K. GDP significantly outweighs its revenue benefit for the Treasury."
Meanwhile,"to make APD fairer," HM Treasury also confirmed plans to add business aviation to the APD scheme, effective April 1, 2013. All flights on business jets weighing at least 5.7 metric tons will be subject to a charge. "The extension of APD to business jet flights is not expected to have a significant effect on overall demand, given that generally APD will account for only a small fraction of the final price of hiring a business jet," according to HM Treasury. "The broader macroeconomic effects of the policy are expected to be negligible."
The document also reiterated a recent move to cut APD on long-haul flights departing from airports in Northern Ireland "in recognition of the unique challenges faced by Northern Ireland in attracting air traffic into its airports. Northern Ireland shares a land border with the Republic of Ireland, where the rate of aviation duty is substantially lower."
The consultation process, which ended in June, collected more than 500 responses from airlines, airport operators, travel agencies, trade groups, business interests, consumers and members of Parliament.
Source: BusinessTravelNews.com - GAI
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