Virgin Leans On UK Conservatives For APD Backing

by Amanda Banks, Tax-News.com, London

06 November 2009

The head of Virgin Atlantic, Steve Ridgway has called on the UK Conservative party leader, David Cameron, to commit to scrapping further increases in Air Passenger Duty, if his party is elected to power in 2010.

Air Passenger Duty (APD) is due to rise in two phases by up to 113% by November next year, hurting all leisure and business travellers leaving the UK. The first stage of the increase came into force on November 1, 2009.

Mr Ridgway, Chief Executive of Virgin Atlantic, commented that:

"These proposed increases will not only hurt the aviation industry but also harm the British economy and those of many developing countries, like the Caribbean, which heavily rely on the tourism trade. It will also tax many hard working British holidaymakers out of flying altogether.”

"We are therefore calling on the Conservatives to see sense on this issue and commit to scrapping the planned increase for 2010 if they are successful at the next election. Everyone knows the airline industry, along with the wider UK business community, will be severely damaged by these unjust future increases in APD.”

"The Labour government seems to claim this is an environmental tax despite a total lack of evidence to support this claim. Aviation is already paying its own way for carbon emissions generated and any further increases in APD are simply lining government pockets."

The increases mean, taking examples from within Virgin's offerings, that the APD tax on a flight from Heathrow to Dubai will go up from GBP40 (USD66) to GBP60 (USD99); the tax on a Premium Economy ticket from Gatwick to Barbados will go up from GBP80 to GBP150 and the tax on an Upper Class flight from Heathrow to Sydney will rise from GBP80 to GBP170.

Virgin Atlantic has set out its main concerns with regard to the government's APD plans:

  • Short-haul routes, where there is often a viable alternative, will receive the smallest increases in APD while the largest will be applied to long-haul routes where no alternatives exist;
  • The levels of APD bear little relationship to the environmental impact of air services;
  • The tax hikes will disproportionately damage the UK aviation industry, as no other country has introduced taxation at this scale;
  • British business and the British economy will suffer as passengers will fly via third countries to avoid the tax;
  • The new banding system is discriminatory against many regions including the Caribbean which is heavily reliant on the tourism industry;
  • Premium Economy passengers will be unfairly hit with the same charges as Upper Class passengers despite their fares being much lower; and
  • The UK aviation industry would be taxed twice-over if APD is not withdrawn as soon as aviation becomes part of the EU Emissions Trading Scheme in 2012.

Since July all of Virgin Atlantic’s e-tickets have carried messages criticising the tax increase by the UK Government, and have called on passengers to contact their local MPs to protest the tax.

Virgin Atlantic supports proposals for a global carbon emissions trading scheme involving all airlines, which are being put forward at this December's Copenhagen Summit. The proceeds from the scheme would go towards finding clean energy solutions.

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