A decision by the British government to increase a tax on all flights leaving the United Kingdom has airlines and tourism and travel organizations in that country worried about the possible impact it will have on air travel into the U.K.
On February 1, the Air Passenger Duty, one of those “taxes, charges, and fees” added to airfares, doubled. The tax on long-haul flights in economy class increased from £20 to £40 [$78.58], while the duty on long-haul flights in business class increased from £40 to £80 [$141.14].
The tax is being imposed retroactively so that it applies to tickets already purchased for travel after February 1.
The Board of Airline Representatives in the U.K., an airline industry organization representing airlines doing business in the U.K., has harshly criticized the increases since they were announced in December. This week, in a statement responding to press reports about the impact the tax increases would have on air travel in and out of the U.K., Board of Airline Representatives U.K. Chief Executive Michael Carrivick said, “Having already indicated our concerns that increases in APD will make the U.K. a more expensive place to visit, it is very sad to see the truth of this being expressed immediately after they took effect. Our member airlines have always done everything they can to continue to promote the U.K., and it is a great pity that they now also have to combat increased air taxation by the U.K. government as part of that process.”
Chancellor of the Exchequer Gordon Brown, front-runner to replace Prime Minister Tony Blair later this year, announced the tax increase in December as a green measure, arguing that increasing the air passenger duty can help reduce demand for airline flights and, therefore, the impact aviation has on climate change.
But Carrivick called the tax a “blunt” instrument that fails to differentiate between airlines that are sensitive to environmental concerns and those that aren’t. He also argued the tax increase would have a minimal effect on the environment that would be far outweighed by the damage it would do to the airlines and the U.K. economy.
As for the impact on the U.K. as a destination, Peter Haigh, a principal consultant with Hamilton Haigh Associates in London, and president of the Meeting Professionals International U.K. chapter, said it depends whether other European countries follow Britain’s lead. “If not, then I think it might have an adverse short-term effect,” Haigh said, adding that he is just as concerned about the current pound/dollar exchange rate (The British pound is now trading at almost $2) and the impact that is having on groups looking to come to the U.K.