Charles Kennedy MP writes: UK’s Air Passenger Duty is damaging our economy

The eyes of the world are now on the UK for the 2012 Olympic and Paralympic Games. We have heard a lot about the legacy of the Games, in terms of the rejuvenation of East London and getting more children into sport, but we also have a fantastic opportunity to create an economic legacy right across the UK. From my perspective, as a Highlands and Islands MP, we want all those visiting or watching the Games to see the beauty of our rugged coastline and mountains and be inspired to visit the outstanding beauty of the whole of the UK, not just London.

I have little doubt that people will be impressed by our magnificent countryside, stunning scenery and warm welcome but the cost of visiting is also something that every family will consider before booking a break in Britain. If we want more people to visit Britain we must be competitive on price and I fear that our own tax policy on inbound tourists achieves the opposite.  Air Passenger Duty (APD), the UK’s aviation tax, is a significant barrier to these people returning.

Tourism is a key industry for the UK economy, delivering over £115bn towards UK GDP and providing jobs for millions of people many in my constituency. The Coalition Government has set out its desire for the UK to become a top five tourism destination, an aim I am certainly in agreement with. Since the railways were built tourism has become bigger and bigger business for my constituents, and the flights now available mean that people visiting Fort William and the landscapes and wildlife of the Highlands and Islands can do so in a fast and efficient manner.

The people of Ross, Skye and Lochaber know they offer a unique experience for visitors, but we are put at a competitive disadvantage by the ever increasing levels of APD, which has increased by between 160% and 360% since 2007. Let me give you an example; an American family of four have travelled to the UK, spent a few days in London and now want to travel to Scotland. It will cost them an extra £96 in APD to get to Scotland and back, and a further £260 when they depart the UK in flight taxes alone! In comparison, similar journeys in France will cost just £40 in tax, a reason why more people are visiting our European neighbours than the UK.

The tax doesn’t just affect tourists, it also affects business. There is a growing body of evidence to suggest that the UK’s APD is acting as a significant brake on inward investment. A 2011 report for Scottish airports, estimated APD would result in Scotland losing 1.2m passengers, 148,000 tourists and £77m in revenue by 2014.

At a time when the Coalition Government is looking hard at ways of stimulating economic growth, it seems apparent to me, that looking again at the impediments we voluntarily apply to trade and inward investment should certainly be areas that we address .

Like many of my colleagues in Westminster I have received many emails from constituents asking me to support a review into the impacts of Air Passenger Duty via the A Fair Tax on Flying campaign.  According to the organisers of the campaign,  over 85,000 emails to MPs have now been sent by constituents. That’s nearly enough to trigger a debate in Parliament and ought to be enough to convey to MPs the strength of feeling on this issue.

Liberal Democrats have always been at the forefront of issues affecting our constituents and there is no bigger challenge now than to make the case for a stronger economy. Looking again at the levels of APD will not in itself bring prosperity but it is part of a package of measures I would urge the coalition government to reconsider. I appreciate that these are economically turbulent times and that difficult decisions must be made, but I hope that the government will listen the thousands of voters who have written to them on this issue and reassess the ‘real’ costs of Air Passenger Duty.

* Charles Kennedy is the Liberal Democrat candidate in Ross, Skye & Lochaber and was MP until dissolution of Parliament on 30 March 2015

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26 Comments

  • Geoffrey Payne 29th Aug '12 - 1:09pm

    Not one single word on global warming.

  • jenny barnes 29th Aug '12 - 1:26pm

    The tax on car fuel is around 80%. the tax on aviation fuel? zero. Why is that, pray tell? At least APD taxes aviation in some way. I looked at the link. Do we really think it makes sense for 4 people to fly to Florida and back for a holiday? Using about 2 tonnes of aviation fuel to do it? Had you noticed the price of crude going up? Ice melting in the Arctic?

  • Astounded that Charles Kennedy would put his name to this piece without any reference to the environmental impacts of aviation. I don’t seem to recall objections to things like the Green Tax Switch campaign from him in the past.

  • Richard Dean 29th Aug '12 - 2:42pm

    So, instead of visiting Scotland, the american family stays for an extra few days in London and spend their money there. Not a problem for the UK as a whole, since the same amount of money comes in from that family, Just a problem for Scotland.

    So this article is really just a piece of special pleading for one part of the UK, not an argument about the UK itself losing out. Will things get better for Scotland if Scotland goes independent? No way! England and Wales can simply up the tax for Scottish destinations!

  • Richard Dean 29th Aug '12 - 3:51pm

    Marek Kohn – the opiate god of the chattering classes?

  • jenny barnes 29th Aug '12 - 3:55pm

    quote more possible than teleporting them with todays technology. unquote

    my teleport is stlll broken. You just can’t get the staff any more; maybe we need an apprenticeship scheme.
    2 tonnes of kerosene. You’re right the alternatives are not practical; my view is that individuals using 1/2 tonne of kerosene for something relatively inessential is just the sort of thing that we should tax. We’re going to need that fuel for running trucks, driving combine harvesters, and ships.

  • Richard Dean 29th Aug '12 - 5:27pm

    British Airways have just sent me a nice email inviting me to sign up at http://www.afairtaxonflying.org which allows me to automatically send a letter to my MP calling for action against APD.

    BA claim that “This tax … acts as a brake on growth and jobs for the whole economy by making it more difficult for businesses to reach new markets, and making the UK less attractive to overseas visitors”.

    Some of this sounds like nonsense to me. APD might well put off holidaymakers from abroad, yes, but it also discourages UK citizens from holidaying abroad, thereby keeping money in the country. And APD is surely a trivial amount compared to the amount a UK business would need in order to develop new markets?

    Are there any calculations anywhere, or are people just shouting for their own slice of pie?

  • Kevin Maher 29th Aug '12 - 6:05pm

    A visa is required for visitors from many countries including China, Russia, India and South Africa.. At £78 this must make many think twice before visting the UK.

  • I think Charles Kennedy is raising an important issue with regard to taxes on aviation. I would advocate the replacement of APD with a Land Value Tax based on the valuation of landing and takeoff slots at UK airports.

    This has the potential dual benefit of incentivising the move of domestic fights from congested airports such as Heathrow to undeutilised airports such as Luton – while at the same-time reducing the competitive cost of direct long-haul routes from areas such as Northern Ireland.

  • Stephen Hesketh 29th Aug '12 - 6:23pm

    Do we as Liberal Democrats really want all UK holiday and business visitors to stay in London??
    How about a policy of raising taxes on long haul flights and reducing it on internal flights (or even Euro-zoned if we legally must) flying above a certain distance from the starting UK airport. I also challenge the view that it is desireable or necessary for everything to fly into London in the first place. Zoning taxes on internal flights could help the further flung UK regions while still acting to reduce CO2 emissions.
    Personally I’d like to see a direct link between flight duty and visible carbon offsetting measures rather than it being just another exchequer tax.

  • Simon Titley 29th Aug '12 - 8:31pm

    As Jenny Barnes rightly points out, airlines pay no tax on aviation fuel. And as Kevin Maher rightly points out, perhaps we should save our indignation for the UK’s exhorbitant visa charges.

    Meanwhile, does Charles Kennedy realise that there is a more civilised alternative to flying?: http://www.seat61.com/

  • There is also no VAT on flying, and typically APD is no higher than the VAT that might otherwise sensibly be levied (as I said in my evidence to the committee). About 40% of the tax is paid by foreigners, which seems to have advantages to me!

    It is also worth noting that the parliamentary all party group that did the report had a secretariat provided by a lobbying company – and I wonder who pays them? I am sure they are not doing it out of the kindness of their hearts.

    Finally, the re are direct flights from the US to Scotland, so the train-allergic American family could always fly to Scotland direct from the US, thus avoiding the extra APD.

    So no, Charles, I am not convinced by your lobbying.

  • A massive thumbs up for Jenny Barnes when she says :
    ” We’re going to need that fuel for running trucks, driving combine harvesters, and ships.”

    We cannot continue with business as usual, and our frivolous use of oil. Clearly Jenny gets it, but I despair when I see how few people understand that the world is changing as the costs of fossil fuels make their inexorable rise, and we will have to adapt our economy and lifestyles to it.
    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9500667/Peak-cheap-oil-is-an-incontrovertible-fact.html#

  • Jonathan Price 30th Aug '12 - 8:27am

    Liberal Democrat policy on air travel is completely misguided. We should join the push for lower air travel duty and give up our objection to the third runway at Heathrow. We need a strong economy to generate the prosperity to allow us to invest in green policies and most importantly to prepare ourselves for the effects of global warming. It is completely unproductive for the UK to impoverish itself in the name of green policy. We need to be a rich country so we can afford the new high speed rail system, the extensive wind, solar and tidal systems as well as the extensive flood protection measure that we will need to stop the country being inundated by rising sea levels.

  • Charles Beaumont 30th Aug '12 - 4:17pm

    I have no problem with APD and it would only strike me as problematic if we could clearly demonstrate it was making the UK a less favourable tourist or business destination. However, there is an aspect to APD that I question: namely the manner in which it is applied. Currently, APD is charged by bands with different parts of the world allocated different levels relating to their notional distance from the UK. However, this system is very crude: the banding for the entire USA from Hawaii to New York is the same, even when the distances involved (and therefore the CO2 generated) are vastly different. As a result, APD is charged on flights from the Caribbean at a higher rate than that on flights from the West Coast of the USA, even though the latter are longer journeys. This has a particular impact on Caribbea diaspora communities in the UK and on small island developing states in the Caribbean that are highly dependent on tourism. It would make more sense and be far simpler to levy APD at a fixed percentage on miles flown.

  • So Charles what has changed since the Kyoto Protocol was agreed?
    Remember air travel was largely left out so as to facilitate agreement and make a start on an essential and fundamental change to the global economy, but it was always recognised that aviation would have to play it’s part.

    Charles, if you were really concerned you would be encouraging your American family to come for a little longer, travel a little slower and take a little more time to soak up the spirit of the homeland…

  • Stephen Hesketh 30th Aug '12 - 7:30pm

    @Charles Beaumont “It would make more sense and be far simpler to levy APD at a fixed percentage on miles flown.” Good idea – better than my zoning!
    @Jonathan Price – Yes we do need a strong economy … but one based on sustainable green growth. Creating more damage before we can afford to behave responsibly is losing something in translation.
    We surely need look at our finite world with its ever expanding population/increased expectations somewhat differently than through the prism of simplistic year on year capitalistic growth.
    Perhaps Tim’s “train-allergic American family” might actually learn something if they did indeed try the train or even hire a small European car once in Scotland! Once we land at an airport we invariably need other forms of transport to get us to our ultimate destination!

  • Stephen Hesketh 30th Aug '12 - 8:53pm

    Jonathan – apologies, rereading my post it sounds as though I think your point favoured simplistic year on year growth. But I would also add that the UK is already one of the richest nations on the planet. If we can’t afford to invest in a green/sustainable way now then almost no one can. Vision and will are key here not finance . I’m pretty sure widespread investment in green technologies would create more jobs than nuclear for example.

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