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Airlines urge scrapping of controversial air passenger duty

Tuesday, February 05, 2013 | 8:42 AM    

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LONDON (CMC) – A new report has said that scrapping the controversial Air Passenger Duty (APD) could generate 60,000 jobs by 2020.

The report commissioned by four airlines, British Airways, easyJet, Ryanair and Virgin Atlantic, is also expected to boost gross domestic product (GDP) by almost one per cent.

The APD, instituted in 1994, is a British environmental tax aimed at offsetting aviation’s carbon footprint. In its initial stage, it was set at £5 (US$7.85) per person.

Regional governments have been lobbying London to remove the tax, which they said negatively affects the growth of the tourism industry since the Caribbean has been placed in a band that makes travel to the region much more expensive than travelling from London to the United States.

Last year, St Lucia Prime Minister and former Caribbean Community (CARICOM) chairman Dr Kenny Anthony expressed disappointment that the United Kingdom had “opted to retain its discriminatory approach”

Anthony said then that he had received a response from the British Chancellor of the Exchequer, George Osborne British government official which he described as “interesting in one respect.

“The Chancellor more or less confirms that the APD was introduced primarily to raise revenue to tackle the deficit in the United Kingdom,” Anthony said.

The airlines that use the London route argue the APD acts as a major barrier to both tourism and potential investment in Britain.

The UK is currently ranked 134th out of 138 countries by the World Economic Forum in terms of competitive aviation taxes and airport charges, ahead of only Senegal, Ivory Coast, Mali and Chad.

The study by the four major airlines estimates the economy would be £16 billion better off by 2015 were APD to be scrapped.

Withdrawal of the tax would deliver an immediate increase of as much as 40 per cent in the number of foreign visitors to Britain, the study estimates, noting it would also encourage airlines to invest in new aircraft and develop routes to high-growth regions.

Last year, the four airlines had urged Osborne to suspend the planned APD pending the outcome of the independent study of the economic effects of such a tax rise.

The airlines said that the eight per cent increase introduced in April would reduce passenger numbers and hinder the UK’s economic recovery.

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