Govt signals it may lower APD for Regional Airports

[nigel osborne]

Seems perhaps an attempt to try and force some airlines away from LHR and LGW. It may help the likes of BHX and MAN in particular who can attract full fare airlines already. :D :ok: :eek:


North’s airport passengers to pay lower tax - Liverpool News - News - Liverpool Daily Post (http://www.liverpooldailypost.co.uk/liverpool-news/regional-news/2012/06/21/north-s-airport-passengers-to-pay-lower-tax-99623-31225910/)

[Shed-on-a-Pole]

The larger airports such as MAN and BHX would actually be wise to get their own lobbying in early, or they could find themselves amongst the "successful" category lumbered with the higher tax burden. Similarly, LTN, STN, SEN will no doubt wish to sidestep the higher tax bracket ...

LCY would also make for an interesting case. Smaller airport predominantly used by high yield business travellers from the City of London. Which tax bracket for them?

[The SSK]

Oh, brilliant

HM Govt is intending to have in place an Aviation Policy by the end of 2013.
Which means it doesn't have one now.
And it shows.

'Heathrow is saturated. Let's shift some business to Dubai'. :ugh::ugh::ugh:

[Skipness One Echo]

How does that work in a single market? You can bet it won't mean reducing APD it will just be a slower rate of increase.

[WHBM]

Oh great ! So if you do say Newcastle-Heathrow-Singapore on BA in business class, the government will whack you with huge and ever-increasing APD. But if you do Newcastle-Amsterdam-Singapore on KLM, the APD will be way less, plus all the revenue is diverted to an overseas company.

The lunatics really are running the asylum now.

[davidjohnson6]

My economic analysis...

Summary - differential APD would have minimal effect from northern England and Scotland, but possible negative effect against UK airlines in favour of AF-KL, EI, EK, LH, LX, SK and TK for people flying long-haul and living near Birmingham, Bristol, Cardiff, Exeter or Norwich

Reading notice 550 (April 2012) from HMRC...
Assuming that the sectors Newcastle-Amsterdam and Amsterdam-Singapore are deemed to be connected flights (essentially on the same ticket, and under 24 hours gap in between), then my understanding is that it counts as exactly the same as Newcastle-Heathrow-Singapore for APD purposes.
The important thing is the starting and end points, allowing for connecting flights, rather than the via point.

Because a ticket AMS-SIN on KL goes non-stop rather than involving a connection, KLM have greater pricing power compared to NCL-SIN, and thus charge a much higher price compared to that attributable for the same sector on a NCL-AMS-SIN ticket. The result is that a NCL-AMS + AMS-SIN pair of tickets is unlikely to be cheaper than NCL-SIN unless you are paying full fare on the entire NCL-SIN route rather than a discounted fare

The impact of any regional reduction in tax is likely to have little or no effect anywhere north of an imaginary line of Lancaster-Manchester-Leeds-Newcastle.

However, the downside of any possible reduced tax from the regions compared to London, is that someone based in a town with its own airport but too near London for flights to Heathrow to exists (for example Coventry or Bath) is now incentivised to fly long-haul from Birmingham or Bristol via somewhere in Europe, instead of taking a train to London and flying from Heathrow with a UK airline.

The other possibility, is that if the difference in duty is large for long-haul flights between regional airports and London, some effective tax avoidance may take place.
If someone who is based in London has to make a trip to Scotland, and (less than 24 hours later) a trip to somewhere outside the UK, then tickets may end up being booked in a way to deliberately save on tax. An example might be a lower tax option London-Aberdeen + Aberdeen-Houston-London rather than the higher tax on London-Aberdeen-London + London-Houston-London

Liverpool is a slightly unusual case. If the tax at Liverpool were very low and KLM were to restart flights to Amsterdam for the purpose of long-haul connections and Liverpool had significantly lower tax than Heathrow, this might create some sort of local economic distortion.

Skipness - while single market rules apply, I could imagine someone at the Dept of Transport or the Treasury dreaming up some sort of scheme to allow certain UK airports to charge less APD than others. Maybe send a subsidy via regional funding bodies ?

[onyxcrowle]

Funny but our local Mp emailed me back to ask me what I would suggest instead of Apd I'd signed the web page thing . I asked him why we can't have variable Apd . I await his response.
But in order to have a catalyst of some kind for regional growth this needs to be done . That or a sliding scale of Apd based on aircraft movements for the year . But this move should not be for a single airport but to help regions in general . There are two airports round here that are very underused and could provide more routes and cargo flights .

[pottwiddler]

The larger airports such as MAN and BHX would actually be wise to get their own lobbying in early, or they could find themselves amongst the "successful" category lumbered with the higher tax burden. Similarly, LTN, STN, SEN will no doubt wish to sidestep the higher tax bracket ...

They are already head of you Shed, they've been lobbying since APD came in.Not just airports but the airlines too.

[TANGO100]

Can anyone tell me out of interest how much the APD (tax) brings in to the Gov. coffers last year and an approx idea of what the new increase would bring in on top of that.
On another point, what doe's the Gov do with the tax it generates, does it go back into aviation, Mmmm... me thinks not

[The SSK]

Can anyone tell me out of interest how much the APD (tax) brings in to the Gov. coffers last year

https://www.uktradeinfo.com/Statistics/Tax%20and%20Duty%20Bulletins/APD0512.xls

On another point, what doe's the Gov do with the tax it generates, does it go back into aviation

The doubling of the tax five years ago (increasing annual receipts by a billion) coincided with the announcement of the Trident missile replacement programme. "Airline passengers fund weapons of mass destruction"

[LGS6753]

General tax revenues are not hypothecated (= spent on the area where the tax is raised). Goes for road tax, APD, National Insurance Contributions, etc.

If you think taxes are too high, then vote for political parties that share your opinion and want taxes reduced as a matter of principle. That means UKIP or (to a lesser extent) Conservative. All the others believe in taxation as a means of imposing their beliefs and values, whether they are Labour, Lib Dems, SNP or Greens.

You could also campaign against the Government expenditure that these taxes are spent on (benefits, bank bail-outs, universal health service, state education, defence, the EU, and the other stuff governments waste our money on).

Personally, I'd rather spend my own money than give it to Government to spend. If you think otherwise, expect everything possible to be taxed. :*

[Ernest Lanc's]

The doubling of the tax five years ago (increasing annual receipts by a billion) coincided with the announcement of the Trident missile replacement programme. "Airline passengers fund weapons of mass destruction"

What!!!..Defence has been cut in all three services...as for Trident, we are getting a reconditioned deterrent system, to placate the Liberals.

[ConstantFlyer]

Generally, it is not a function of government to skew markets, and where it has been tried in the past, it has usually been unsuccessful. Governments are better at constructing frameworks within which society - and the market - can operate.

Governments put a tax on income not because they want people to stop earning, but to enable those who can afford it to make a contribution to paying for things it feels are better bought jointly, rather than by individuals. In contrast, Ryanair puts high fees on hold baggage precisely to discourage us from taking any, as it costs it money to transport and handle it. We therefore change our behaviour accordingly and either take hand luggage only or fly another airline.

APD has very little to do with trying to change our behaviour; there are few alternatives. Tinkering with it at the edges, such as for the New York flight from Belfast, has some short term benefit, but ultimately loses out. Why? Because tax needs to be seen to be fair. Ryanair can say that its baggage charges are a matter of business economics. Fairness does not, and need not, come into it. But governments need to apply taxation in a fair way that neither disadvantages nor discriminates. Current APD is already bordering on the arbitrary, as it penalises a granny taking a once-in-a-lifetime trip to New Zealand over a banker weekending in Monte Carlo.

Yet there is one way in which lower APD in the regions could make a difference. It could encourage foreign airlines to switch services from Heathrow to regional airports. Let's take Air Algerie as an example. It currently flies 5 times a week from Algiers into the UK - LHR T4. British Airways flies daily from Algiers into Gatwick. What is the reason for AH continuing to choose LHR as its point of entry? While some passengers will, of course, be heading for London, many others will be making long journeys to all parts of the country - a student going to Durham, a manager visiting a supplier in Warwick, a person visiting family in Glasgow. Many passengers could just as easily - or possibly more conveniently - fly into Birmingham or Bristol and make those onward journeys. Such non-alliance airlines will have fewer interliners too. Why doesn't AH switch now? Inertia? Could a change in APD make it attractive enough for an airline like Air Algerie to make the move? If it (i) saves the airline money, and (ii) proves to be an as, or more, attractive option for its passengers, then yes.

Other airlines that currently use Heathrow as their only UK entry point that might be encouraged to switch include Tunis Air, LOT, Royal Air Maroc, Egyptair, MEA, Uzbekistan, TAM, Eva, Saudia, China Southern, China Eastern, and many more. Their departure from LHR would, if done en masse, relieve some pressure. If that's what the government wants to achieve, then it can try and do it; but it should be under no illusion that using taxes to skew the market will either be fair to northern regional airports or that anyone other than the market (i.e. airlines and their passengers/freight customers) will decide.

[Nakata77]

ConstantFlyer:

Govt's do this all the time - for example favourable tax rates for car-makers and other businesses to set up shop in places like Durham and others rather than wanting to locate in popular hubs like London.

Another example: JP Morgan were given favourable tax rates to set up their European HQ in Bournemouth of all places.

There is nothing unfair or unjust about this, it's basic business economics as you said yourself.

APD is in exactly the same territory and I think this is at least a move towards recognising that regional airports are important to the national economy and are currently being UNDER used.

If I was in charge I would create three tiers: Premium airports like LHR and LGW, major regionals like MAN, EDI, BHX and under-utilised regional airports like SEN, BLK, EXT to encourage different levels of stimulation.

[WHBM]

If I was in charge I would create three tiers: Premium airports like LHR and LGW, major regionals like MAN, EDI, BHX and under-utilised regional airports like SEN, BLK, EXT to encourage different levels of stimulation.
So let's shaft the few success stories we have left and reward the commercial failures ?

Sorry, but that's what you're suggesting.

Meanwhile in France and Germany they REWARD their hub airports, and progressively steal so much of what could be routed through the UK, with UK companies, employing UK staff.

[davidjohnson6]

It all depends on Govt policy and what it aims to achieve. BA + BAA have their own interests which differ from other parties given current infrastructure constraints.

Ultimately much of this comes down to continual postponement of a decision over runway capacity in London

The Govt may prefer to see more direct European and long haul flying from the regions instead of just London. This is likely to boost traffic at places like Birmingham but at the expense oc Heathrow. BA would of course prefer that everyone flying to/from the UK regions expressed a preference to fly via LHR. You can't keep everyone happy all the time.

[Fairdealfrank]

No, no, no, this is tinkering, APD needs to be scrapped!

[zfw]

Well my MP has just replied to the APD protest......

And this line stood out for me....

"With us currently paying over £120 million every day on debt interest payments alone, APD makes an important contribution to reducing the nations deficit and this must be taken into account."

So there you have it, not a "Green"tax on emissions as the lying **$%£ have been telling us, but just a way of paying off the National Debt.

zfw

[onyxcrowle]

Similar reply to mine but asking me then if I didn't like it what I'd do instead . So I sent a detailed reply and a list of suggestions , he's written back an official letter telling me that's he's passed it to Ms Villers and I can expect a response within 30 days . One of the questions I posed was why is there no duty on cargo flights ???. I must say the email back as you say flies on the face of the stated reason for APD being a carbon tax . I wonder how this is sustainable as a tax if it's just to clear the national debt !

[WHBM]

I wonder how this is sustainable as a tax if it's just to clear the national debt !
Well actually, if the higher taxes really were to clear the national debt then I think quite a few here would just feel that had to be done, in exactly the same way as the mortgage on your house does have to be repaid.

What we can't accept is all the excuses for higher taxation while said debt shows no sign of significant reduction, which seems to be the current case, the extra tax all seeming to fall into a black hole.