ATA opposes UK air passenger duty tax grab

Nov 25, 2008

The Air Transport Association of America (ATA) has expressed its stiff opposition to the UK government's decision to revise and greatly increase the amounts collected under its air passenger duty.

Published: 25 Nov 2008

The Air Transport Association of America (ATA) has expressed its stiff opposition to the UK government's decision to revise and greatly increase the amounts collected under its air passenger duty.

According to the trade organisation for the leading US airlines, this "extraterritorial decision by the UK government is counterproductive to the airlines' environmental progress and is in conflict with established law".

"Though the UK government asserts that it moderated the amount of the air passenger duty increase in light of the world economic crisis, the increases still are substantial. For example, for a one-way flight to the UK from the US, the per-passenger duty in economy class will increase from 40 pounds (approximately $60 US) per passenger today to 60 pounds (approximately $90 US) by 2010," highlighted the ATA.

"The decision to revise and further increase the UK duty is a revenue raiser for the government under the guise of environmental protection," said ATA President and CEO James C. May.

"The funds collected do not go to environmental projects, and yet the taxes take money from airlines that they could otherwise invest in more fuel-efficient and greenhouse gas (GHG)-efficient technologies. This is an illegal action, which we expect to be settled in the courts."

It highlighted that the revised duty is in violation of various provisions under the Convention on International Civil Aviation (commonly known as the Chicago Convention) and the relevant bilateral air services agreements that regulate extraterritorial actions and taxes and charges.

"No other industry is more motivated by market forces to improve fuel and GHG efficiency than the airlines," May said. "Our track record proves that we do not need any further environmental incentives. Even with the recent drop in oil prices, fuel continues to be our highest cost center. With jet fuel averaging between 30 and 50 percent of total airline operating expenses and accounting for well over a third of airline ticket prices, there is no need for any further price signal to reduce fuel burn and resulting emissions."