Govt May Reform Air Passenger Duty

By Paul Homewood

 

 

A quick round up of some interconnected news items:

First up, greens are up in arms at suggestions that the government will reform or even abolish Air Passenger Duty for domestic flights, following a rescue deal for Flybe:

 

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The immediate future of Flybe was secured on Tuesday night after ministers agreed a rescue deal with shareholders to keep Europe’s largest regional carrier flying.

The package of measures includes a potential loan in the region of £100m and/or a possible short-term deferral of a £106m air passenger duty (APD) bill, plus a pledge to review taxes on domestic flights before the March budget.

After the spectre was raised of another UK airline failure, Flybe’s owners Connect Airways – a consortium led by Virgin Atlantic – were persuaded to commit millions more to cover ongoing losses.

The airline has argued it is particularly hard-hit by APD, which is charged on each passenger on a flight taking off in the UK. While all short-haul economy flights, including domestic, are charged at the same rate – £13 – the tax is applied to each leg of a domestic return flight. That means, for example, that a return Flybe flight from Cardiff to Manchester is taxed at £26, while the duty on a Glasgow to Malaga return costs half that….

The government had been urged by MPs, unions and business to save Flybe, which serves almost two in five domestic UK flights and employs more than 2,000 people. It carries 8.5 million passengers a year between 56 airports across the UK and mainland Europe, and is the main airline at regional airports including Belfast, Southampton and its Exeter base….

Potential moves to ease APD were condemned by environmental groups. The MEP for South West England – a constituency that includes Flybe’s Exeter home – Molly Scott Cato of the Green party, said it was “absurd to suggest that we should provide a further boost to the aviation industry”. She highlighted that routes deemed socially necessary could be subsidised under EU rules – Flybe’s Newquay to London route is already funded with state aid.

Greenpeace UK’s chief scientist, Doug Parr, said: “The government cannot claim to be a global leader on tackling the climate emergency one day, then making the most carbon-intensive kind of travel cheaper the next. Cutting the cost of domestic flights while allowing train fares to rise is the exact opposite of what we need if we’re to cut climate-wrecking emissions from transport.”

https://www.theguardian.com/business/2020/jan/14/flybe-saved-after-successful-last-ditch-talks

 

Evidently Greenpeace and their cronies would rather see 2400 jobs go down the drain.

Just as important though is the role that airlines such as Flybe play in regional connectivity. Doug Parr might like us all to go by train, but in reality spending several hours on a train to get from Southampton to Glasgow is not an option for most people.

At a time when we are supposed to be driving growth in the regions, shutting down domestic flights would be a disastrous own goal.

 

 

Tim Newark takes things a step further in the Express (before the government plan was announced):

 

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Air Passenger Duty (APD) has always been an unwelcome tax on hard-working people flying abroad on holiday, but now it is set to cost 2,300 UK jobs at Flybe. If the Prime Minister wants to deliver on his pledge to improve transport connections between UK regions, he must waive this tax and encourage competitiveness.

UK air carrier Flybe stands on the brink of collapse thanks to the massive burden of a tax that is not imposed on either rail or coach passengers. Some £106million of tax is due this year unless the Government steps in to defer it over a longer three-year period. That’s an unfair fiscal hit on air passengers and air companies. Last year, Flybe accounted for 38 per cent of all UK domestic flights and eight ­million passengers. Owned by a consortium of Virgin Atlantic, Stobart Group and Cyrus Capital Partners, it’s a major player in Boris Johnson’s commitment to improving infrastructure within the UK.

It’s route from London to Cornwall is so important it is already part subsidised by the Government. Other routes may be commercially unviable but are necessary nevertheless.

Fast travel between major ­cities in the UK is vital for encouraging business.

Of course, no private company should be immune from going bankrupt and the Government’s reluctance to intervene is understandable as it could encourage other failing ­businesses to seek rescue with taxpayers’ money.

Yet this is not a case of a bad business model but over-burdensome tax harming the ability of a company to survive.

Tax needs to be tailored to provide a level playing field and APD is distorting the market.

Air passengers pay £26 per person in APD for a domestic return journey – and higher rates for longer flights abroad. It’s levied each time an aircraft takes off from a UK airport so hits domestic carriers especially hard.

In total it generates £3.7billion for the Government.

That’s a lot of money coming out of the air industry and it’s not just the air companies that are suffering.

More than 25 UK regional airports serve Flybe, employing thousands of people in ancillary services and their competitiveness with other European airports is also damaged by this unnecessary tax.

If Boris does intervene, he is right to cut the tax across the entire air industry to help all passenger carriers.

It is no surprise that environmental activists are up in arms over this, with Greenpeace saying it would be a “shocking decision” as flying is high in carbon emissions.

They want to see more taxes on flights so that only the rich can afford to go abroad on holiday.

Not only is that wrong, attacking the poorest in society, but it is also a massive hurdle for business.

It would be wonderful if we could all cycle to work or catch a train for a meeting.

But sometimes business people need to attend meetings quickly and efficiently, not ­dawdling along on a journey that takes a day rather than an hour to get there.

Brexit Britain must decide whether it is open for global business or not, preferring to pull up the drawbridge in pursuit of a carbon neutrality that shackles enterprise and loses jobs.

It is simply a question of striking the right balance between protecting the environment but also enabling us to work hard and create a prosperous society for all.

Constant catastrophising about climate change adds very little to what should be a ­measured debate.

https://www.express.co.uk/comment/expresscomment/1228365/Brexit-news-air-travel-airline-taxes-Tim-newark

 

As he alludes, it is not only APD on domestic flights, but international ones as well which is a problem.

 

 

Meanwhile a new report reckons that the switch to EVs will cost hundreds of thousands of jobs in Germany:

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The switch to electromobility could result in serious job losses in Germany’s auto industry, a new study has found.

In the production of engines and gearboxes alone, up to 88,000 jobs could be cut, according to research by the National Platform Future of Mobility (NPM) for the German government, reported newspaper Handelsblatt on Monday.

In total, the NPM working group, chaired by the head of union IG Metall Jörg Hofmann, believes 410,000 jobs are at risk of being slashed in Germany by the end of the decade.

The results of the report are to be presented on Monday, two days before a car summit.

https://www.thelocal.de/20200113/rise-of-e-mobility-in-germany-puts-400000-jobs-at-risk-electric-cars 

The car industry believes this figure is overstated, but it seems likely that job losses will still be massive either way.

Of course, if new technology proves to be cheaper and better, job losses cannot, and should not, be avoided. However, the move to electric cars is not market driven but government enforced.

It is also likely that many jobs will simply be lost to Asian manufacturers, who currently are behind Germany in technology.

Many more jobs will also be lost in oil refineries and associated sectors.

And in other news from Germany, Siemens have told Greta to get lost:

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https://www.livemint.com/companies/news/siemens-snubs-greta-thunberg-s-appeal-says-will-honor-adani-coal-mine-contract-11578874542177.html

 

 

Finally Germany is resisting a plan to provide more money for the EU’s climate policies:

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The German government is resisting a plea by Brussels to provide more funding to get the EU‘s flagship climate change policy off the ground – in a blow the continent’s decarbonisation hopes.

Commission president Ursula von der Leyen on Tuesday unveiled details of the bloc’s ambitious €1 trillion Green Deal, alongside a call for additional funds for the EU budget to make it happen.

But Germany’s finance ministry has already started the year by rejecting calls for more funding, stating that the current EU budget is sufficient to meet the continent’s climate goal of going carbon neutral by 2050.

https://www.independent.co.uk/news/world/europe/germany-climate-change-emergency-money-eu-latest-a9284876.html

 

 

All of these news items have one thing in common – economics.

Gradually it is dawning on people that the cost of climate policies, so far hidden away, will be immense.

In the words of Bachman-Turner Overdrive- You ain’t seen nothing yet!

via NOT A LOT OF PEOPLE KNOW THAT

https://ift.tt/361RrdY

January 16, 2020 at 09:09AM

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