Yahoo Finance Heathrow urges Chancellor to scrap air tax on domestic flights in Budget
Heathrow is urging the Government to scrap a punitive travel tax on domestic flights to support economic growth as part of a nine-point Brexit plan.
The airport has written to the Chancellor Philip Hammond ahead of the Budget in November with a plea for air passenger duty (APD) to be removed on domestic routes, arguing that UK passengers pay an extra £225m each year compared to those in Europe.
The UK’s rate of APD is the highest in Europe and the second highest globally, behind only the central African country Chad.
Passengers on a return domestic flight from Heathrow pay £26 in APD. Scrapping the charge would result in a £24m annual saving just for those flying from that airport.
The airport said the tax acts as a brake on the number of domestic flights offered by airlines and that removing it would be a sensible move post-Brexit given that most European countries have little or no tax on internal flights to support their domestic industries.
Consultancy Frontier Economics reckons removing APD on domestic flights would increase GDP growth and boost tax receipts to offset the loss to the Treasury from the abolition of the tax.
In addition to the aviation industry, the Conservative Party's partners in government, the DUP, support getting rid of ADP on overseas routes as well.
Research commissioned by Manchester Airports Group showed that in the past 12 years, UK APD to non-European destinations had grown by 265pc - from £20 to £73 per departing passenger - and that this had been a major factor in long-haul seat growth in the UK lagging behind rivals in Europe
Heathrow chief executive John Holland-Kaye said: “Abolishing air passenger duty on domestic flights is a bold move that would supercharge British competitiveness, make it cheaper for British businesses to get to London and beyond, and ensure every part of our country can prosper in the future.”
The comments came as the airport released its Bringing Britain Closer report, a nine-point strategy it believes offers “practical, deliverable and binding plans” to connect more of the UK to global growth and prepare the economy outside London for Brexit.
Heathrow has called on the Government to ring-fence a number of slots at the airport once it is expanded for domestic use but ministers can only do this once the UK leaves the EU because the bloc’s competition rules currently prohibit such a move.
Getting rid of APD has the support of some airlines, especially those with large domestic networks. Flybe chief executive Christine Ourmières-Widener claimed APD could account for as much as 50pc of a total ticket price on her airlines when based on its lowest fares.
