Belfast Telegraph

Monday 21 April 2014

Air Passenger Duty is still in a hopeless mess

The runway to hell is paved with good intentions.

Look, here is what the Treasury said only this week about flying: "The Government was minded that aviation duty, as a per plane duty, should apply irrespective of the passengers carried." At last: recognition that an aircraft with only half its seats occupied has almost as much impact as a full one. I have been banging on for a decade about the need for tax to reflect the damage caused by aviation, by applying Air Passenger Duty (APD) to every seat whether or not it is occupied. Airlines would be incentivised to fill their planes, and flights which regularly flew with lots of empty seats would be grounded.

So what did the Chancellor actually do about it in this week's Pre-Budget Report? Nothing. Despite Alistair Darling's previous protestations about his concern for the environment, private-jet users will continue to enjoy their tax-free status, even though the harm generated per person carried is disproportionately high. Freight operators also escape taxation. For commercial flights the same old per-passenger tax applies.

APD has increased for most flights, as everyone expected, but extra complexity has been introduced in a botched attempt to penalise passengers according to how far they fly. Bureaucratic muddle-headedness is evident even in the phrase used to describe the new system: "APD will be structured around four equidistant bands, set at intervals of 2,000 miles from London". The Government appears to believe that "equidistant" means "equally spaced". It doesn't; equidistant means a certain location is equally far from two other points. Example: from Birmingham airport, Belfast and Jersey are both 225 miles away, and therefore equidistant from it.

Mr Darling wants to show his heart is in the right place. The principle is, the further you fly, the more you pay. Fair enough, except that the concept is messily applied.

For a start, take-offs and landings are the most damaging parts of the flight, when engines are at their least efficient. The departure and climb phase of a Boeing 737 causes much the same harm whether a plane is flying 201 or 2001 miles. To reflect this, a fairly high tax should be applied to every flight, with marginal increases according to distance. In fact, the Government has done the opposite with a very low "entry-level" tax.

The distance measure is taken to the capital city of each country and applied to all destinations in that nation. Because Ankara, the capital of Turkey, is 1,761 miles away, the tax from next November will be just £11 – up only a pound from the current level of APD. The increasingly popular nation of Egypt, meanwhile, is in the second band – whereupon the tax quadruples to £45, for about half-an-hour's more flying.

Then there is Cyprus, capital Nicosia (or Lefkosa if you prefer the official version). Whatever you call it, the city has no functioning airport. Nevertheless my reckoning from the OAG Flight Guide is that it lies 2,010 miles from London. The tax should therefore be £45. A cynic would say that a bit of geo-jiggery-pokery has ensured the island's capital is shifted left a bit to get it in the lower band; otherwise a million Brits a year would find themselves paying the same tax to fly to the eastern Mediterranean as travellers heading to the Pacific coast of America.

This ridiculous state of affairs has come about because the Government is not, as it claims, keen "to ensure that the structure of aviation tax sends environmental signals to passengers and the industry alike". It just wants to make the new tax look pretty much like the old one, in which economy-class passengers to Europe currently pay £10 while those heading beyond it pay £40.

Of course, plenty of British travellers will be making journeys of more than 4,000 miles yet paying only £45 in tax. How so? Because distances are measured from London to the nation's capital. Washington DC is only 3,662 miles away, but many of our favourite US destinations are well over 4,000 miles. These include Florida, Texas and California. Even Hawaii, which should be in the highest bracket, gets a tax break.

Fancy a flight to Albania?

This is the best of Novembers for Albania, Europe's strangest state. Last week it was featured as Destination of the Week in The Independent Traveller; yesterday the Albanians celebrated their National Day; and within a year a boom in British tourism can be expected thanks to Alistair Darling effectively cutting the cost of a flight to Tirana by £29; Albania, like Morocco and western Russia, finds itself one of the few beneficiaries of the APD changes.

The absurdity of the system is shown by the fact that the "equi-distant" tax bands go only as far as 6,000 miles. Beyond that, it does not matter whether you are going to Cape Town or nearly twice as far to Auckland: the tax remains the same, at £55.

New Zealand's government will be relieved that passengers heading for that beautiful but distant nation will pay only £55 in duty for a flight of 24 hours or more, just £10 more than that four-hour hop to Larnaca. Yet ours expects us to believe that the odd tenner will make travellers think twice about visiting the far side of the world.

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