Business leaders warn of cost rise for air passengers

THE cost of flying short haul from the region could soar if Government proposals are implemented, business leaders claimed yesterday.

THE cost of flying short haul from the region could soar if Government proposals are implemented, business leaders claimed yesterday.

Newcastle International Airport said coalition plans to switch from a four-tier banding of aviation tax to two or three-tier would have no benefit for North East passengers.

Instead, transport chiefs claimed domestic flights and short journeys to Europe could rise significantly, creating a threat to international transport links from the region.

The concerns are the latest criticisms to emerge from the airport ahead of the final deadline for submissions to the consultation on aviation tax, announced by Chancellor George Osborne in the budget.

The details of the North East argument will be passed to the Government this week, when the listening exercise closes on Friday.

The key issue remains Air Passenger Duty (APD), the “unfair” tax which impacts disproportionately on regional airports, and against which The Journal has rallied against through our A Tax Too Far campaign. Newcastle Airport is reliant on the budget airline holiday flights for its financial security. Airport chiefs have said anything which jeopardises the short-haul routes could destabilise the region’s stuttering economic recovery.

Graeme Mason, planning and corporate affairs director at Newcastle International, said: “The alternative being put forward by the Government is to switch to a two-band option, with bands A and B delineated at a distance of 2,000 miles.

“Our view is that by participating in a debate about the comparative advantages and disadvantages of each option we would be losing sight of our key concern, that APD is having a very damaging impact on regional air services and regional economies. For this reason we will be arguing against the switch, and call for a radical overhaul which assists regional economic growth.

“One of the by-products of both of the new alternatives is short-haul passengers would pay more. As regional airports have more short-haul services, many of which are more marginal in terms of viability, any such switch would further undermine regional aviation.”

As well as the banding system, the Government consultation aims to look at class distinctions, business jets, the impact on regional economies, and whether devolved administrations in Scotland, Wales and Northern Ireland should have the power to decide their own aviation tax policy. Airport chiefs have already spoken out against current plans to introduce a “Lear jet tax”, which could force influential business leaders and politicians to remain focussed on the South East, instead of spreading wealth to the regions.

Newcastle Airport have also argued against APD being charged at the same rate on premium economy seats as business class seats.

The UK has the highest rate of APD of any country in Europe.

Aviation chiefs have pointed to countries, such as the Netherlands, where the greater impact of the tax on regional airports has been proven. Figures show traffic to the country has increased by 4.7% after it abolished its version of APD in 2009.

While the rate of APD has been frozen this year, the duty has increased by 2,600% since it was first introduced in 1994.

 
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