Launching a campaign to oppose the UK coalition plan, IFW Editor Kizzi Nkwocha says: 'It will inflict long-term damage on freight operators already on their knees'
The UK’s coalition government has signalled its intent to scrap Air Passenger Duty (APD) in favour of a per plane tax, as a way of tackling the budget deficit, while reducing greenhouse emissions caused by jet fuel.
A Treasury spokesman said no firm plans had been set out yet, but any changes to the way airlines are taxed would need to go through “the normal legislative process” – meaning a switch could not
take place overnight. As well as raising revenue, the government believes the new tax will help streamline air traffic, since it would target inefficient planes and discourage airlines from flying half-empty aircraft.
IFW firmly believes this tax is an ill-conceived notion, born from an inherent misunderstanding of the air industry. Despite what government ministers believe, airlines do not wastefully schedule their flights. In the air industry, every penny is a prisoner.
The economics of the industry dictate that any airline that plans to stay in business has to schedule its flights as efficiently as possible – if only to reduce its use of hugely expensive jet fuel. The environmental benefit of this self-imposed efficiency culture speaks for itself.
The simple fact is that a per plane tax – no matter how much or how little – will only result in making Britain a less competitive place to do business. This will further damage an industry still struggling to recover from the effects of the recession.
It is only common sense that, with a per plane tax in place, air services, especially freight-only ones, will quickly look to cheaper Continental hub airports to do business. The resulting loss of business at UK airports will not only cancel out any potential gains to the Chancellor’s coffers, but could lead to a net loss in revenue. It will also inflict long-term damage on freight operators that are already on their knees, operating on the thinnest of margins.
IFW believes a more sensible way of raising revenue would be to examine the level of ADP – rather than introducing a new, draconian tax system. We also believe that a more practical way of encouraging environmental awareness in the air industry is to encourage and reward increased investment in ways of reducing greenhouse gas emissions.
We will be campaigning for this plan to be abandoned, and for government ministers to listen to sound economic reason.
Source: Kizzi Nkwocha, IFW News, 01 June 2010