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Continuing Story opposition against government new airline taxes in the UK

ATW Daily News by Aaron Karp and Cathy Buyck - 7 Dec.06/ 2Feb.07/14Mar07

Wednesday March 14, 2007

UK Conservatives consider new airline taxes as Blair introduces 'green' bill

With environmental politics taking center stage in the UK, the opposition Conservative Party said this week that new taxes on both airlines and passengers should be considered as a means to reduce carbon emissions.

Prime Minister Tony Blair yesterday introduced a "revolutionary" bill that would commit the UK to reducing emissions by at least 26% by 2020 and by 60% by 2050. The opposition Conservatives, who will play a role in crafting the final legislation, are focusing on air transport taxes as a tool to lower emissions. Party Leader David Cameron said the UK's current aviation taxation system is "fundamentally flawed," adding, "Carbon emissions from aircraft are taxed less than virtually any other form of carbon, yet because they are released high into the atmosphere, they can do the most damage."

The UK doubled its air passenger duty last month, but Blair's Labour Party and the Conservatives are battling to demonstrate strength on environmental issues. Conservatives say the duty is "superficial" since it is unrelated to emissions and "provides no incentives for airlines to use more fuel-efficient aircraft."

The Conservatives are considering proposals that would tax frequent fliers and impose fuel taxes on airlines and/or taxes based on which engines they use. The party, which historically has favored lower taxes, said its policy would be based on "the principle of pay as you burn" and that other taxes paid by UK citizens would be lowered to offset the new air transport levies.

Carriers quickly rejected the Conservatives' approach. "More taxes on airline passengers will not reduce emissions," Ryanair responded. "If the [Conservatives] want to reduce [aviation's] tiny percentage then they should penalize old aircraft and connecting flights. Better still, they should tackle the real polluters like power generation and road transport which together account for nearly 50% of [harmful] emissions compared to aviation's 2%."

Added Virgin Atlantic Airways: "Taxing passengers has failed as a means of reducing the growth in emissions. . .Taxing passengers more would damage the UK economy as it would make UK airlines less competitive and shift jobs to other countries in Europe." British Airways called taxation "an extremely blunt instrument."

Friday February 2, 2007

Opposition organizes as new UK passenger duty goes into effect

The new UK air passenger duty took effect yesterday and some airlines and tour operators are considering challenging the measure in court.

In addition, some politicians are questioning the legality of the tax increase because it had not been approved by the parliament. "The legal opinion we've received says there is no legal basis to collect the increase in tax," Shadow Chancellor of the Exchequer George Osborne said.

Chancellor Gordon Brown announced the doubling of the APD in his Pre-Budget Report on Dec. 6, citing environmental concerns. The levy doubled to 10 ($19.59) for economy passengers on domestic and European short-haul flights and to 40 on long-haul flights. For business and first class passengers the duty rose to 20 on short-haul operations and 80 for long-haul.

Tour operator First Choice said it is launching a legal challenge. "We are also challenging the fact that they have brought it in so quickly in any case," MD Dermot Blastland said, noting that tour operators, unlike airlines, were unable to collect the duty retroactively.

However, carriers also are facing problems collecting the increase for tickets sold before the announcement. Some, including British Airways and Air Malta, decided to absorb the added APD. EasyJet said in a statement yesterday that "around 90%" of its passengers prepaid the tax online or by phone and that remaining customers will pay prior to check-in. It said "senior managers will be at airports across the UK dressed as 'Tax Collectors' explaining to customers why they are being asked to pay this additional tax."

Thursday December 7, 2006

UK seeking to lower emissions, double passenger taxes despite airline objections

The UK yesterday announced that taxes on airline passenger tickets will double to 10 ($19.80) for most flights from Feb. 1, with duties on long-haul business class tickets doubling to 80 per ticket, as part of an effort to reduce carbon emissions.

Finance Minister Gordon Brown told the House of Commons that aviation accounts for a fifth of carbon emissions produced by transport and that the UK "must take action domestically" to increase pressure for a wider EU and/or international agreement on reducing aviation emissions. UK airlines roundly criticized the move, saying it would hurt carriers financially while producing little environmental benefit.

"Air passenger duty is an extremely blunt instrument that provides the treasury with extra funds for public spending without any benefit to the environment whatsoever," BA said in a statement. "Further taxing hard-working families and British businesses is not the way to address climate change. This hike in air passenger duty is revenue-raising pure and simple and aviation is being treated as a cash cow."

EasyJet CEO Andy Harrison said the new charges are "the wrong tax for the economy and the wrong tax for the environment." He complained that the duty hike "penalizes all airlines and aircraft equally" even though there are environmental impact disparities between carriers and aircraft types. He added that Brown is "penalizing the traveling public...they are unlikely to forgive him."

Flybe CCO Mike Ritter said Brown was "playing political football" with the airline industry and asserted that "cleaner fuel" and more efficient aircraft and ATC management are the best ways to address environmental concerns.

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