AIRLINES MUST TAKE FAIR SHARE OF FUEL TAX BURDEN

In a letter to the Chancellor in advance of the Pre Budget Report, AirportWatch has pointed out that those who travel by air have it easy compared to those who travel by car:-

• Motorists pay 58p a litre duty on their fuel. Airlines pay nil.

• Motorists pay a further [22p] VAT on their fuel. Airlines pay nil.

• Motorists pay 20% VAT to have their car serviced. Airlines pay nil.

• Motorists pay 20% VAT to buy their car. Airlines pay no tax on new aircraft.

Air Passenger Duty (‘APD’) would need to be quadrupled to compensate for the fuel duty and VAT exemptions enjoyed by the aviation industry (2).

And whilst motorists complain about swingeing year-on-year increases in the cost of filling up at the pump, the vast majority of airline passengers still pay APD at its lowest rate of £12, just £2 more than it was in 1997 (3).

Many motorists rely on their cars to travel to and from work or for their weekly shop but the vast majority of flights are for leisure purposes and, despite the advent of so-called ‘cheap flights’, air travel is increasingly becoming the preserve of an affluent minority. Fewer than half the UK population took any flights at all in 2010 and those who did had average household income in excess of £50,000 (4) .

Chairman of AirportWatch, John Stewart, commented:
“We hear a lot of ritualistic grumbling from the aviation industry about levels of Air Passenger Duty but they conveniently forget to mention the £11 billion a year subsidy they enjoy from paying no fuel duty and no VAT. They also conveniently forget to mention their own surcharges. In these difficult economic times, the airlines must be made to take their fair share of the fuel tax burden.”

ENDS

NOTES FOR EDITORS

  1. A copy of the AirportWatch letter to the Chancellor is available upon request.

  2. In 2010/11 the exemption from fuel tax and VAT was worth more than £11 billion to the airlines. After deducting APD revenues, the net benefit is around £9 billion — equivalent to a subsidy to the airlines of about £360 per household. Even the 53% of the UK population who do not fly — mainly the less affluent — find themselves subsidising the aviation industry.

  3. APD for economy short haul flights applied at a rate of £10 per passenger from 1997 until 2001 when it was halved to £5.00. The £10 rate was restored in 2007, increased to £11 in 2009 and to £12 in 2010. In 2010/11, 77% of all passengers paid the lowest (£12) rate.

  4. Actual figure = £50,139. Source: CAA 2010 Passenger Survey, Table 14.

  5. Further details of calculations and data sources are available upon request.