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Airports say APD contributes to lost routes

Plane LandingAirports across Britain have voiced their concern about lost routes due to Air Passenger Duty (APD) through a poll conducted by the Airport Operators Association (AOA). The survey included 26 British airports, who say they are worried about how further increases to the levy will impact the industry. This emerged only days before the Autumn Statement tomorrow, during which Chancellor George Osborne is due to confirm that APD will rise another 2.5% from April. The tax just had a double inflation increase this past April.

The AOA’s research found that 25% of airports in the UK believe passenger numbers will fall over 5% in the 2013-14 year as a result of APD hikes. On top of this, 25% think passenger numbers will drop between 2% and 5%. The also survey found that an overwhelming 73% say they are very concerned about the plans the government has to raise APD, and 83% say the current levels are having an effect on if airlines decide to fly from their airports or not. All of the airports questioned in the poll back calls for APD to be frozen until the Treasury conducts a full review of how the tax impacts the nation’s economy.

While the research has unveiled how airports feel about APD hikes, it also discovered evidence of the damaging commercial impact and loss of routes the tax is having. The AOA notes that, in March, Gatwick Airport said Air Asia X stopped operating its Gatwick-Kuala Lumpar route due to rising APD. Bristol Airport says the tax has contributed to reduced domestic flights by budget airlines Ryanair and easyJet. It also says the levy is one of the reasons Continental Airlines stopped its route between the airport and Newark in November 2010.

Continuing this evidence, the AOA points out that Glasgow Prestwick Airport says its Stansted- Belfast, Dublin, Bournemouth and Shannon routes have either been severely affected or lost due to APD hikes, along with two Scandinavian routes. Southampton Airport claims domestic routes have been unpleasantly affected by the tax, including those to Edinburgh, Glasgow and Leeds-Bradford. Services to Brussels have also been impacted. Other airports say that airlines are making it clear they won’t add new capacity or routes because of the levy, while some are concerned about how hard it is to attract airlines to add new routes.

Bristol Airport chief executive Robert Sinclair says that more increases to APD risks pricing airports out of the market for inward investment and travellers. This is coming at a time when the government is counting on the regions to help it with rebalancing the economy.

Glasgow Airport managing director Amanda McMillan has previously said that it will always be tough for them to gain and sustain new routes due to the size of the Scottish market. However, this is made worse by APD, which only depresses demand and deters airlines from basing planes in the country. Unless there’s a reform to the tax, people travelling in and out of Scotland will continue facing some of the most expensive air taxes in Europe, as they need to fly because of a lack of viable alternatives. This is clearly a disincentive.

AOA chief executive Darren Caplan says it’s clear British Airports are already under pressure from the APD consumers have to pay, as these are the highest taxes in the world. Osborne should immediately halt any planned increases to the tax and get the Treasury to carry out an economic impact review to determine the scale of the damage the levy is having on airports and the UK economy.

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