Government admits it failed to consider impact of new tax on airports

Nov 10 2009 by Adam Jupp and William Green, The Journal

Ms Eagle, now Pensions Minister, also said: “However, I suppose that a rough-and-ready calculation is precisely that, and one can always find anomalies.”

Graeme Mason, head of planning and corporate affairs at Newcastle International, said: “Rough and ready is not what this region deserves when so much is at stake. The Government still fails to understand the impact that the APD increases will have on marginal regions and marginal air services.”

APD is levied on how far the capital of the destination country is from London and there are four bands, all of which rose in November, having previously doubled in 2007. The tax on an economy short-haul flight to Europe or North Africa has risen from £10 to £11 and in November next year to £12.

But an HM Revenue & Customs (HMRC) spokesman said: “To analyse the impact of APD on individual airports would have required a significant amount of data that is not currently available to us, some of which is commercially sensitive, such as information on air fares, airline pricing strategies, and airport plans, to name but a few.”

Ed Anderson, executive chairman of the Airport Operators Association, said: “The structure is indeed rough and ready but cannot disguise the fact that the tax is being increased at a time when aviation, and the wider economy, is suffering from the effects of the recession.”