The soaring cost of fuel is having a devastating effect on the profitability of our airlines and, as anyone caught up in the demise of Silverjet will tell you, it’s not much fun finding yourself stranded thousands of miles from home when your carrier goes bust.
With this in mind, Neil Pakey, MD at Liverpool airport, has made a plea to the government not to “tax planes out of the sky”. Most of us accept that our hands are tied as far as the cost of fuel is concerned, but at a time when Airport Passenger Duty is being reviewed by the government, Mr Pakey’s pleas are particularly relevant.
APD, an excise duty which is currently charged per passenger flying out of the UK, could be replaced by a charge per plane and, in the light of the rise in fuel prices, there is fear that the economic impact of this could be disastrous. Mr Pakey points out that for every pound spent investing in air services, forty four pounds is reaped in economic benefits for the region.
Neil Pakey is not the only person speaking out against the possibility of duty being charged per plane from Nov 2009. BA warned its shareholders last month that this move could “distort competition” and “adversely impact” their profitability.
Controversy surrounded the doubling of APD in early 2007, although the Treasury attempted to appeal to our green consciences, by forecasting that this rise in duty would result in a reduction of harmful emissions. This was disputed at the time by experts in the aviation industry. However, the new way of charging duty, if introduced, is likely to encourage airlines and manufacturers to become more environmentally friendly since the tax will be based on emission levels.