IAG said yesterday that the U.K. wouldn’t get its low cost airline, LEVEL until the government reduced APD – airport departure tax.
The U.K. Govt. charges £78 ($121 US) per person in tax for over 12 year olds, before adding the airline fare and airport customer and customs charges to a long haul economy ticket. APD is £156 ($220 US) for Premium Economy and Business, with Business rising to £178 ($251 US) in April this year.
IAG claims that its one way fares start at just $88 and adding taxes to that makes it ridiculously expensive. The argument is that with Brexit the U.K. will be even more dependent on air travel and all the tax does is deter people from flying from the U.K.
Air Tax avoidance is growing a market segment however. If U.K. passengers are prepared to fly to Europe or Ireland they only pay the much lower short haul tax on the first flight, then the much lower long haul tax charged in Europe, most of which are half what the U.K. pays or less, some countries have no charge at all.
While IAG has a point and the APD is considered a tax on lower income families and single travellers, Government finds it impossible to cut itself off from a guaranteed revenue stream and Brits are showing no sign of cutting back their travel. The endless expansion of airlines like Norwegian demonstrates it makes little difference.
U.K. passengers pay by credit card, airline fees on those totalling up to 5% were recently abolished by the EU, and UK citizens have the highest credit card debt per capita in the Western world, at over £11,000 per person on average. There seems to be no inclination to change their travel habits.
It seems therefore, that this is just another PR offensive against APD by Willie Walsh and IAG that, as usual will fall on a deaf governments ears.