Earlier this week Caroline Spelman welcomed a debate to address the issue of Air Passenger Duty. Air Passenger Duty an excise duty which is charged on the carriage of passengers flying from a United Kingdom or Isle of Man airport.
Locally, Birmingham Airport supports 25,000 jobs and has an economic impact in the West Midlands region worth roughly £1.1 billion. Passenger numbers at the airport continue to grow year on year and in 2014 the airport handled 9.7 million passengers. However, it is argued by consultants that if APD was reduced by 50%, the number of passenger using the airport would increase by 2.9 million by 2025. It is estimated that this would create a further 7650 jobs in the local economy and grow the local economy by £330 million.
An Airport Operators Association survey found that the APD has had a direct effect on passenger numbers and routes – with reports suggesting that many domestic routes have historically had to be scrapped because of the charge. This means that many Regional airports, who operate less frequent flights, are at a disadvantage, as rates of Air Passenger Duty are calculated on the destination of the flight and the class of travel that a passenger is in.
Contributing to the debate, Caroline Spelman said:
Now is absolutely the right time to have this debate. Air passenger duty has had unintended consequences, with closures of and reductions in services, but taxes are designed to drive our transport choices.
As far as the West Midlands is concerned, if one objective is to turn people away from aviation towards alternative forms of transport, yet the problem is that there is no spare capacity on the railway line.
This tax needs to be examined from the viewpoint of whether it is nudging behaviour as it was intended to. If not, and if it is having unintended consequences, there is a strong case for the review to be completed as soon as possible.