20 July, 2020

UK airline industry wants a year long break from air passenger duty tax.

The UK's airline industry wants a year-long break from the government imposed air passenger duty tax or the consequences could be dire, warns industry campaigning body, Airlines UK.

The trade body says without the emergency tax break,  UK airports will lose around 600 routes initially and in 12 months’ time, around 80% of the lost routes will be in the UK regions.  

Yet,  with a 12-month waiver, it could save 45% of the air routes out of the UK that would otherwise be lost due to the impacts of the Coronavirus COVID-19 pandemic, a new report has found. In addition, the support could potentially save 8,000 jobs and contribute an additional £7 billion in GVA.

The study carried out by York Aviation and commissioned by Airlines UK, the industry association for UK-registered airlines, shows:

With an emergency 12-month Air Passenger Duty waiver in place, the situation improves with the number of routes that would immediately return at around 35. This grows steadily as the market recovers, with an APD waiver supporting an additional 56 routes by July next year. In other words, by July 2021 it would have saved around 45% of routes that would otherwise be lost;
The APD waiver would boost passenger demand by around 12% over the next 12 months. This equates to around 21 million passengers over the 12 months against a baseline of 170 million passengers.
An APD waiver could potentially save 8,000 jobs over the next 12 months and enable the sector to support an additional £7 billion in GVA. This GVA saving is around 3.3 times greater than the expected revenue from APD over the next 12 months.
Read the full report here.

UK airlines, the trade body for UK registered airlines, with members representing all sectors of the industry, is now asking for an emergency 12-month APD waiver to be announced no later than the autumn Budget to boost demand and enable the UK aviation industry to recover from the worst crisis in its history.

Tim Alderslade, CEO of Airlines UK, said: “UK airports are in danger of losing many valuable routes over the coming months unless the Government steps in with a support package for our sector – starting with an emergency APD waiver to get us through the winter and into the recovery. Some of these routes may never come back but APD relief will – by next July – save almost half that would otherwise be lost. The UK came into this crisis as the third-best connected country in the world – it would be a tragedy if through Government inaction and neglect we needlessly forfeited this position to our closest rivals.”

The call has support from a number of Conservative politicians, including Andrew Griffith, MP for Arundel and South Downs and former No 10 Business Adviser to the Prime Minister, said: “It’s never been more vital that Britain remains open for business. It would be disastrous for our regional and international airports to lose hundreds of routes to important global trading and tourism destinations. Whilst not the whole answer, if suspending the headwind of Air Passenger Tax can help get UK aviation – one of the jewels in our industrial crown – back on its feet sooner we would be remiss not to seriously consider it.”

Graham Brady, MP for Altrincham and Sale West and Chairman of the 1922 Committee, said: “We are in grave danger of causing real and lasting damage to UK aviation if measures are not taken to protect routes out of our airports and support the sector through what we know will be an extremely challenging winter. Almost alone within Europe, we have been slow to appreciate the importance of aviation – not only as an industry that supports a million jobs – but as an enabler of the outward-facing trading nation we wish to be.”

Airlines contribute enormously to the vibrancy of the UK economy:

Direct contribution to GDP of £5.2 billion
Overall contribution to GDP of £10.9 billion, when the effects of the supply chain and workforce are added
Support around 200,000 jobs
Goods worth £116 billion shipped by air between the UK and non-EU countries, representing 35% of the UK’s extra-EU trade by value
The express air freight sector facilitates £11 billion of UK exports a year and supports over 38,000 jobs in the exports industry

The situation facing UK aviation remains highly precarious,  so far over thirty thousand jobs have either been lost or are on the very verge of being lost within the aviation industry. The future is looking so uncertain,  with many believing unless the UK Government steps up, the aviation industry and its supply chains could ultimately lose up to and even surpassing 124,000 jobs.

Passenger numbers and demand is very low, between 70-80% below what it was this time last year and whilst demand is slowly picking up following the relaxation of border restrictions in June,  bookings are still much much lower than previous years.  According to recent figures, bookings are 
70% down in August 2020 compared to August 2019. 

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