Air tax rise brings fears for North East economy

Nov 1 2010 by Dan Warburton, The Journal

AIRPORT chiefs last night made calls for the Government to rethink its air tax policy and protect the North East economy.

Today, Air Passenger Duty (APD) will increase for the second time in as many years, meaning a family holiday for four could go up in price by more than £300.

There are fears that the hike could lead to vital routes being lost to the region, which in turn would have a devastating impact on our business community and the ability to attract future investment.

The Journal is today urging Downing Street to restructure the levy in line with the impact it has on the regions, compared to London.

And airport bosses last night supported our proposal for the introduction of a reduced rate of APD for new start-up routes in and out of the North East.

Newcastle International Airport’s planning and corporate affairs director Graeme Mason said: “We welcome The Journal’s intervention, and I am sure many other regions will agree.

“What better way to stimulate the private sector in the North East than to put in place an incentive for airlines to base here? Regional aviation has been affected by the recession, but this has been badly compounded by a series of rises in APD.

“By varying the rate of APD between regions, or introducing a start-up rate of APD for new regional connections, the Government would be providing just the boost the region needs.”

APD, which generates around £2bn for the Treasury every year, is touted as a green tax designed to mitigate the impact of aviation on the environment.

But critics dismiss that claim, saying the money it creates is not spent on environmentally-friendly initiatives, while the EU’s Emissions Trading Scheme, which will be introduced in 2012, will exist to regulate pollution caused by the industry.

Last October, The Journal launched its A Tax Too Far campaign, highlighting the disproportionate impact it has on regions like the North East and calling for a rethink.

Weeks after our campaign was launched, then chancellor Alastair Darling admitted the levy was a revenue raiser, as opposed to a green tax.

On November 1 last year APD on an economy short-haul flight to Europe or North Africa rose from £10 to £11 and today goes up to £12.