Diesel cost

[vanHorck]

I got a mail letter today from my club about the cost of Avgas and Avtur, and how Avtur is going up by 50p.

At first i didn t think too much about it, because I don't know many turbine pilots.

But then it hit me.

All the Thielert-engined planes and other diesels, whom I understand were confronted with high maintenance cost already, including the uncertainty on their next engines, will be hit severely, to the point Diesel may no longer remain so attractive....

But on top of that all these new VLJ's (many affordable single engine jets) will be hit in case they're used for private flying too (Airlines I'm led to understand will be able to reclaim the tax!!) ,

thats one way of cutting short the development of GA !!!!!

Any opinions?

[madlandrover]

Not exactly. The 50.35p tax will only apply to pleasure flying, so training flights will be exempt. The VLJ situation is unknown for now - HMRC have kindly said they'll release a statement at some point before the 1st Nov, so we'll see... It's also hard to say exactly what'll happen with PPL hirers, for example. Will we have to charge a surcharge, will everyone suddenly start taking an FI to make it a training flight (poor fix to say the least!), will hire flights for the purpose of keeping a licence current be taxed or seen as necessary? I'd be surprised if some places don't consider getting an avgas aircraft or 2 on the fleet just for hire use!

[Mickey Kaye]

"pleasure flying"

What about the charter airlines isn't a flight to spain for pleasure?

[Mike Cross]

Not just aircraft. Spare a thought also for the marine industry where diesel will be going up by the same amount.

This all comes about from an EU thing claled the Energy Products Directive, from which the UK had a derogation that is now expiring.

Many years ago AOPA UK managed to persuade HMG that avgas should not be taxed at the same level as road fuel. They and others have now persuaded HMRC that avgas should be treated as a "specialist fuel" and that the duty rate should again not be raised to the same level as that for road fuel. Unfortunately that argument did not prevail for avtur.

Of course the commercial sector (AOC holders and airlines) were able to marshall resources and lobbying to ensure they did not get hammered. The leisure pilots sadly do not have the lobbying clout because too few of them are willing to fund campaigning by joining organisations that lobby on their behalf. The result is that a fledgling industry will go to the wall for the sake of squeezing a small amount of extra revenue out of an inefficient and costly taxation system.

More info here (http://www.aopa.co.uk/scripts/news.php?id=OTM)
and here (http://www.lightaircraftassociation.co.uk/Consultation/TaxAviationFuel.html)
and here (http://www.lightaircraftassociation.co.uk/pdf/Consultation/AviationFuelConsultation.pdf"[/url]
and [URL="http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ConsultationDocuments&propertyType=document&columns=1&id=HMCE_PROD1_028437)
and here (http://customs.hmrc.gov.uk/channelsPortalWebApp/downloadFile?contentID=HMCE_PROD1_027787)
and here (http://www.hmrc.gov.uk/si/2008-2599-em.pdf)

Particularly noteworthy in the last document from HMRC is the statement Private pleasure use of avtur, and therefore the revenue impact, is considered negligible.

The lesson to be learned from all of this is to get off your @rse and either submit your own responses to consultations or join an organisation that will fight on your behalf.

[IO540]

From the AOPA site

Unfortunately the same EU law means the UK is required to introduce a tax on avtur used for recreational purposes, and this has been fixed at 50.35p a litre. Because only a tiny amount of avtur is used for private pleasure flying, HMRC will gather the tax on an ‘honesty box’ system where users will declare each quarter what proportion of their fuel was used for pleasure. All flight training and business use will be exempt.A much more likely explanation, Mike, for this apparent apathy is that most avtur burners affected by this are owners of

- DA42TDi

- Turboprops (e.g. Jetprop, Meridian, TBM700/850)

- Light jets (non AOC ops)

Virtually all of these people will have an IR, which means they left the "pilot information distribution community" years ago and consequently never heard of this proposal. The flight training business does not embrace owner pilots so these people are out on their own.

Most real pilots who fly to real places don't hang out on pilot forums, either.

Chatting to other pilots who I bump into at airports confirms the above. These people mostly operate outside "the system" and don't receive any of the pilot information which you and I are so familiar with. The only publications they are likely to read regularly are the U.S. Flying and U.S. AOPA magazines because these are informative for the kind of flying these people do.

Same goes for e.g. EASA pilot licensing and certification proposals. The vast majority of stakeholders are completely unaware of them. I have lately been contacting the Marketing VPs of the bigger iron makers and it turns out they were totally unaware.

Interesting that "flight training" is exempt. Does this mean that an owner pilot who receives training in his own plane gets duty free avtur for that flight?

This will kill off the diesel retrofit market.

[Mike Cross]

The only publications they are likely to read regularly are the U.S. Flying and U.S. AOPA magazines because these are informative for the kind of flying these people do.
But not informative on flying in Europe. If you fly in the US join AOPA US, if you fly in the UK join AOPA UK, if you do both join both. People shouldnt expect AOPA US membership to inform them of developments in Europe or to act on their behalf with EASA or the EU.

Guidance on how the scheme will operate and the definition of what is subject to tax is here. (http://www.hmrc.gov.uk/briefs/excise-duty/brief5008.htm)

[Slip up]

Does anybody know if we are allowed to reclaim the duty through drawback and if so is there any point in paying it in the first place ?

[vanHorck]

IO540, you seem better informed than most.....

Do you have any idea when you can reclaim this tax and when not (I understand all have to pay it, some can reclaim).

Owners of diesel engine singles
Owners of diesel engine twins
Owners of turboprops
Owners of VLJ
people who hire one of the above for a family trip
people who hire one of the above for a business trip paid for by their company
people who hire one of the above for a business trip which they pay for themselves as being company owner.

You say this will kill diesel retrofit. How about the consequences for people who have a diesel as standard such as DA40 and DA42?

Has anyone made revised costs comparisons between the diesel route and avgas route? I m asking this because there was a lot of talk that diesel flying was cheaper (although this was in the opinion of some offset by the increased maintenance cost)

Thx

Bert

[soay]

Do you have any idea when you can reclaim this tax and when not (I understand all have to pay it, some can reclaim).
As I understand it, no tax is paid when you buy the fuel, but you have to sign a document stating that some or all of it will be used for pleasure flying. Then you have to pay the tax due within the month.

There was a huge premium in the price of a Thielert engine compared with a Lycoming engine, in Diamond aircraft, which was only made viable by the lack of tax on avtur. That premium covered the warranty cost of parts that have to be replaced at specified intervals, such as the gearboxes. Now that Thielert have gone bankrupt, the warranties are all worthless, so Diamond owners have been severely punished for daring to fly with a modern, fuel efficient engine.

I suppose, as usual, we're the only country in Europe to have implemented the Energy Products Directive.

[Mike Cross]

Do you have any idea when you can reclaim this tax and when not (I understand all have to pay it, some can reclaim).
Don't know why I bother. Read the link. (http://www.hmrc.gov.uk/briefs/excise-duty/brief5008.htm)

For Fuel Drawback information read this. (http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000203&propertyType=document)

soay
The EPD came into force on 1 January 2004.
The derogation from the European Energy Products Directive ( EPD) which allowed the UK to charge a reduced rate of duty on aviation gasoline (Avgas) and to exempt aviation turbine fuel (Avtur) used in private pleasure-flying expired on the 31 December 2006. The UK is in breach of European legislation and as such is liable to infraction proceedings by the European Commission. The Government announced at Budget 2007 that the changes needed to implement the requirements of the EPD would be introduced with effect from 1 November 2008.

[Slip up]

So,

If I understand this correctly, you can claim drawback when loaded onto an aircraft for a foreign flight.

If this is correct and I am still not 100% convinced I have read the situation right, then we would have to fill a form with payment to HMRC for the duty and then fill another form to then claim it back. Or do we just do the sensible thing and declare to the re-fueller that it is a for use on a foreign trip. :confused:

[dont overfil]

An honesty box system? They've got to be kidding. It will cost a fortune to chase this up, it'll not be worth it.
Remember the honesty system for claiming the VAT back on flying training! Now that was cheap flying for a while!
DO.

[vanHorck]

So a flight for a pilot owner/renter who owns a company (trust), flying from UK mainland to Jersey or Man to collect some cash is a business trip, just as a trip between company locations:

Definition of private pleasure-flying defined
The definition of 'private pleasure-flying' is as in the Energy Products Directive:

'Private pleasure-flying' shall mean the use of an aircraft by its owner or the natural or legal person who enjoys its use either though hire or through any other means, for other than commercial purposes and in particular other than for the carriage of passengers or goods or for the supply of services for consideration or for the purposes of public authorities.'

For these purposes 'private pleasure flying' means flying other than in the following circumstances:

commercial operation or use of aircraft by companies for the carriage of passengers or goods as an aid to the conduct of their business and the availability of the aircraft for whole aircraft charter, flown by a pilot (or pilots) employed to fly the aircraft
the non-commercial operation or use of aircraft by a company, for the carriage of passengers or goods as an aid to the conduct of company business, flown by a pilot (or pilots) employed to fly the aircraft
the non-commercial operation or use of aircraft by an individual for the carriage of passengers or goods as an aid to the conduct of his/her business or his/her employer's business

It keeps coming down to the same: the cost of the use of diesel engines for private flying just went up by A MASSIVE LOT

So GA is being dealt a huge blow.

As far as I am aware this decision is european wide, not only UK

[GOLF_BRAVO_ZULU]

Leaving aside the Tax/Duty aspect, can anyone (who actually knows) explain why AVTUR/DIESO/DERV is more expensive per gallon than ULGAS (the alcohol adulterated stuff you buy at petrol stations)?

I would have thought such a wide cut fractional distilate would be cheaper.

[Mariner9]

All middle distillates typically rise against crude values as winter approaches due to increased demand for heating fuels and increased kero content in DERV to meet winter specs. This year there have been other factors such as ever tightening sulphur specs and lack of desulphurisation capacity.

Whereas, gasoline prices typically fall against crude values due to reduced demand for Gasolines as the so called "Summer driving season" ends.

The reverse generally arises in Spring.

[Mickey Kaye]

"I would have thought such a wide cut fractional distilate would be cheaper."

It is. If one campare car derv to petrol then derv is the cheaper fuel. The govenment just taxs it more.

[Mariner9]

With respect Mickey, that's incorrect.

Wholesale prices 6-9th October Northwest Europe $/ton: (excluding any taxes)

Derv $833.38
95 RON Gasoline $752.13

As far as I can recall, Derv's been more expensive than Gasoline since January when they were last at (about) parity.

M9 (Oil Industry Consultant)

[Squeegee Longtail]

So how come Diesel is cheaper than petrol in France, Italy, Spain etc? In fact diesel is only more expensive than petrol in the UK as far as I can see.
Incidentally, it used to be cheaper than petrol until a lot of people bought diesel cars.

[Mickey Kaye]

I stand corrected but I certainly know that didn't used to be the case. Has this change occured due the surge in demand for heavier oils from the far east/indian subcontinant?

[Mariner9]

Mickey: There are many factors. Increasing demand in the Far East of course plays a role, for example Diesel demand in India alone is currently 1 million barrels/day, up 10% from last year. As I mentioned previously, another factor is the tightening of the sulphur specs and shortage of desulphurisation capacity.

Squeegee: The difference in retail prices arises primarily through differing duty rates in the various countries.