Is the much criticised UK government’s Air Passenger Duty (APD) hitting holiday travel too hard. With global recession, the weak pound and green issues already hitting airlines, is the planned tax hike the straw that could break the travel industry’s back.
The largest low-cost airline operating in Britain, Ryanair, has announced that it’s to cut back the number of UK flights dramatically with Stansted flights being reduced by 40%. The current 40 aircraft based at the airport will come day to 24 from October 2009.
With the hard-nosed Ryanair it’s always difficult to know how much they mean or if it’s just a negotiating ploy. But when their arch-rival easyJet agrees with them about the tax, perhaps the government should listen. Other big players like BA and Virgin are also suffering as their First and Business class numbers are hit hard and the industry is getting ever more vocal in its criticism of the latest tax hike.
Currently, passengers flying out of the UK pay £10 for each short-haul flights and up to £40 for longer trips. Later in 2009, these taxes rise to £22 for a return short trip and an eye-watering sum of up to £90 for long-haul return flights. The charges will go up again in 2010.
A family of four flying to the Caribbean, Kenya, South Africa or Thailand next winter, will pay £300 in APD. Further afield, families planning trips to Singapore, Malaysia, Indonesia or Australasia will pay £340 – more than double the current rate of £40 per passenger. And that’s before they even think about the ticket price!
As might be expected, the Government is claiming that green issues lie behind the tax hike. It’s an argument that’s simply not believed by aircraft operators. Virgin boss Sir Richard Branson brands it “one of the most unjust taxes out there. There’s not a shred of evidence that the £2billion currently being raised is going towards environmental or sustainable projects.”
The Government’s claim that the move will cut carbon emissions doesn’t impress environmentalists either. They have criticised the tax for encouraging air passengers to believe that they are doing their bit for the environment, making them less likely to contribute to carbon offsetting schemes.
Ryanair’s decision will reignite fears about the future of several regional airports which are in doubt, due to a dramatic fall in passengers numbers and the number of routes being cut over the last 12 months.
Abta, the Travel Association, has raised concerns about the impact that APD will have on regional passengers who are forced to fly via London, forcing them to pay the tax twice if they are travelling with two different airlines. Premium economy passengers are also to suffer as they will pay the same level of tax as passengers flying in business or first-class. Those flying in premium economy cabins to Australia will pay £170 from November 2010 – more than double the current fee of £80.
The changes will also harm tourism to Britain, with foreign visitors forced to pay APD on the return leg of their journey.
Michael O’Leary of Ryanair also says the tax is riddled with inconsistencies as it’s not paid on cargo flights or by transfer passengers. This mean you could get two passengers sitting next to each other on a long-haul flight, one having paid a massive tax bill, the other not a penny.
He also points out that the Belgian, Dutch, Greek and Spanish government’s have dropped tourist taxes or reduced airport charges to zero to stimulate tourism and adds: Sadly, UK traffic and tourism continue to collapse while Ryanair continues to grow traffic rapidly in those countries which welcome tourists instead of taxing them.
While it hurts to agree with a man famed for finding every possible way to force passengers to pay more for baggage, checking-in, on-line booking fees ad nauseam, he does have a point. If other governments are trying to help tourism, why does the UK, with a prime minister constantly saying he’s doing everything possible to beat the recession, follow a course that’s causing massive damage to tourists and the airline industry?