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Scrap passenger duty to get people flying again, MPs tell Chancellor

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234311956_StanstedAirport.jpg

Air passenger duty should be axed to slash holidaymakers' ticket prices and enable crisis-hit airlines to put on more routes and flights, the Chancellor has been told.

A group of leading Tory MPs and backbenchers has written to Rishi Sunak urging him to waive the duty, which ranges from £13 to £515 per person per flight, in order to aid the recovery of aviation following the Coronavirus pandemic.

The 24 MPs including Sir Graham Brady, chair of the influential 1922 committee of Tory backbenchers, say aviation has been one of the sectors hardest hit by the pandemic with a 98 per cent fall in flights and projections that it will take up to four years to recover to pre-Covid levels.

A reduction in the duty - which is higher in the UK than nearly all other nations - would, say the MPs, boost demand and make more routes and flights economically viable following the Government’s decision to lift UK quarantine for holidaymakers flying to 74 countries and territories

The charges -  from £13 to £78 per short-haul flight depending on class, and from £78 to £515 for long-haul - ranked the UK 140th and last in the world for price competitiveness by a 2019 World Economic Forum report.

UK airports and airlines face £20 billion losses this year with tens of thousands of job losses without more support, according to the International Air Transport Association.

“Our sky-high levels of air passenger duty risk restricting the UK’s economic recovery and international competitiveness, damage trade and business and risk leaving Global Britain behind our European neighbours,” said the MPs in their letter on the eve of Mr Sunak’s recovery blueprint.

Other signatories include Henry Smith, Tory chair of the cross-party Future of Aviation group, former aviation minister Paul Maynard, and former children’s minister Tim Loughton.

They continued: “If we maintain our current levels of air passenger duty, it will become a ‘tax on recovery’ as flying is the only viable route for investors and businesspeople to approach and service existing and potential new markets.

“Therefore, we are asking that you suspend air passenger duty until the conclusion of the summer season of 2021 to provide much needed support for our aviation sector and the thousands of jobs that it supports.

“We would also urge you to use this period to conduct a full review of air passenger duty to determine whether the policy supports the Government’s broader aims including a truly global Britain.

“We need urgent action now to safeguard jobs, the UK’s international competitiveness as an aviation hub and, crucially, to ensure that our economy recovers from the impacts of COVID-19 as soon as it is safe and possible to do so.

“A temporary suspension of air passenger duty would support this and be a powerful symbol that Britain is open for business.”

Suspending air passenger duty for a year would cost the Treasury £3.7 billion. The all-party Commons transport committee urged Government to institute a six-month waiver allied to 12-month business rates relief for airlines and airports.

Unlike other countries, the aviation industry has not received a specific industry-wide bail-out although companies have taken advantage of generic Government schemes including furloughing staff, corporate financing and loans to the tune of more than £1 billion.

By comparison, US airlines can access $58 billion (£46 billion) in loans and payroll grants, while US airports can share $10 billion (£8 billion) of support.

Australia, France and Norway have also introduced industry wide schemes. Air France-KLM, for example, have received €10 billion (£8.9 billion) from the French and Dutch governments.

John Holland-Kaye, Chief Executive of Heathrow Airport, told MPs: “It is an indication that the French, the Germans, the Americans and others see aviation as fundamental to the success of their economy.  “They were the first to step in and make sure that their aviation sectors would do well out of this.”

The MPs’ letter highlighted the industry’s role in trade by pointing to the fact that 40 per cent of the UK’s non-EU trade by value travelled by air, predominantly in the hold of passenger aircraft.

In an article for the  Telegraph, Tim Alderslade, chief executive of Airlines UK, wrote: “The Chancellor recently urged people to return to the shops. By suspending APD, he would be sending a clear signal that people should return to the skies.”