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UK: Airlines claim passenger duty abolition would boost economy by £16bn

PUBLISHED: 16:01 04 February 2013 | UPDATED: 16:01 04 February 2013

Stansted Airport

Stansted Airport

Photo © BAA Limited. Photo is licenced for single agreed use by International Airport Review and must not be distributed - pleas

THE Treasury today rejected claims that scrapping the Air Passenger Duty (APD) airport departure tax would boost the UK economy by at least £16billion in the first three years.

Abolition of the tax would result in almost 60,000 extra jobs in the UK in the long term, according to a report commissioned by four UK airlines, including British Airways, with the move paying for itself through resulting increases in revenue from other sources such as Income Tax and VAT.

The report, compiled by consultants PricewaterhouseCoopers (PwC), said the boost to the economy would come from extra investment in the aviation industry, an increase in inbound tourism and improved productivity resulting from increased business travel.

The four airlines, which besides BA included Virgin Atlantic, Ryanair and easyJet, said: “Should APD be abolished, the aviation industry would be able to move quickly to add new flights in and out of the UK, or invest in new products and services, creating new opportunities for businesses and much-needed jobs across the UK.”

However, a Treasury spokesman said: “We do not recognise the figures in this report or agree with the assumptions behind it.”

Since 2010, any increase in APD had been limited to the rate of inflation, so that the rate paid by most passengers had increased by just £1, he added.

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