PowerSwitch

London Evening Standard - 18/03/11

Aviation is the most undervalued and overtaxed industry in Britain.

Airlines and airports are engines of economic growth. They support more than 500,000 jobs across the country and provide the transport links that are vital to the success of UK businesses in a globalised economy.

Inbound tourism generates more than £16billion a year for the UK, half of which comes to London. Flying is a social good too - it broadens horizons, creates opportunities and brings families and friends together.

Our industry can play a crucial role in accelerating Britain's recovery. Yet the policymakers seem intent on suffocating us with ever-increasing taxation.

There is talk that next week's Budget will bring yet more rises in Air Passenger Duty. APD has more or less tripled in the past five years, and has left UK airlines the most heavily taxed in Europe by a startling margin.

A family of four travelling to Australia from the UK in economy class pays £340 in APD. From Germany, the equivalent tax would be £164. From France, it would be just £15 - and in 22 EU countries, it would be zero.

Holland, Denmark and Norway have abolished their aviation taxes in recognition of the damage they were inflicting on their economies.

We understand the state of the public finances, and are willing to pay our fair share to help the country put things right. But this extraordinary level of taxation for our industry is putting the UK at a massive competitive disadvantage.

Aviation is not a high-margin industry. In the past decade, British Airways made a 10 per cent profit once, and most airlines never came near it. Crippling taxation makes it so much harder for us to invest to provide the network and services the economy wants.

Some people say we should pay high APD because aviation fuel is untaxed and airlines produce too much carbon.

The truth is that fuel is lightly taxed for all forms of public transport. And while taxpayers pay more than £5billion a year in subsidising Britain's rail and bus networks, aviation costs the public purse nothing.

Of course, airlines should pay their way environmentally - and the Government's own figures show that we do. Even before last year's hike in APD, revenues from the tax were equivalent to more than twice the carbon costs of UK aviation.

Nor should we forget that in barely nine months' time, UK airlines will face an additional cost burden from the EU carbon trading scheme.

Carbon trading is a better way than taxation. It focuses directly on emissions reduction and gives airlines an incentive to invest in cleaner technologies. At British Airways, we are doing just that: buying new aircraft that emit up to 30 per cent less carbon than their predecessors and setting up Europe's first biojet fuel plant.

But carbon trading is not cheap. The cost for Europe's airlines is forecast to be around €1.4billion next year, and rising thereafter.

It is completely unjust that UK airlines should face this further levy on top of a domestic tax regime that is massively more onerous than that experienced by our European rivals.

In today's interdependent world, air travel is fundamental to the needs of the economy and society. Let's halt this taxation juggernaut, and let airlines help Britain succeed.

Keith Williams is CEO of British Airways.

Original Article