Government accused of underplaying impact of aviation tax on airports

Nov 21 2009 by Adam Jupp, The Journal

THE Government has been accused of hugely underplaying the impact of increased aviation taxes on regional airports.

Air Passenger Duty (APD) went up at the start of this month and is set to rise again next year, meaning in some cases it will be four times what it was three years ago.

The hikes are passed on to passengers through ticket prices, which has led to fears key routes could be lost to the region, delivering a devastating blow to the North East economy.

Downing Street says the rises are designed to make the industry pay for its environmental damage and admits passenger figures across the country will fall.

But figures accessed by The Journal reveal a huge gap between what is predicted by the Government and the projections of the region’s two airports.

Estimates calculated by the Department for Transport – used to inform taxation policy – show predicted passenger figures at Newcastle International for next year are more than 5.9 million. But last year, numbers had dropped to just over five million, with a further fall expected this year.

The same set of projections suggest the APD rises will lead to just 1,400 fewer people flying out of Tyneside.

And the following year, estimated passenger number are placed at 6.1 million, with around 4,500 fewer people jetting-off as a result of APD.

But aviation chiefs say these figures massively underestimate the effect the tax rises will have.

The last time APD rose – in 2007 – low-cost carrier easyJet removed an aircraft from Newcastle International, resulting in 300,000 fewer passengers using the airport, while the Jet2.com route to Bergen, Norway, was pulled, with APD cited as a contributing factor.

DfT chiefs are also accused of ignoring the impact of the recession on passenger figures but they say fresh estimates have been produced to take account of the economic downturn.