4 October 2010
The fringe event hosted by Conservatives for International Travel asked about the future of aviation taxes under the coalition Government. Chairing the discussion was writer and blogger Jonathan Isaby of ConservativeHome. On the panel were Ed Anderson of the Airport Operators Association (AOA), Mathew Sinclair from the Tax Payers Alliance (TPA) and, representing the Conservative Party, Graham Brady MP and Chair of the Conservative 1922 Committee.
On whether aviation should cover its environmental costs, Mr Anderson pointed out that aviation pays higher taxes than other sectors and, raising concerns about the competitiveness of the UK, he pointed out that many other European countries have decided against any unilateral aviation taxes, such as Air Passenger Duty (APD).
Mr Anderson noted that, whilst Germany has APD, they will be phasing it out when Germany joins the EU Emissions Trading Scheme (EU ETS) in the coming years, and suggested the UK might do the same. He went on to argue that the EU ETS is the best way of linking costs and emissions and that APD should be phased out otherwise the aviation industry in the UK will be paying twice. Mr Anderson also noted that, in the face of these concerns, many airlines are now relocating.
Mr Anderson outlined the opposition of the AOA to a Per Plane Duty (PPD), proposed by the previous Government. It was felt that all freight operators would relocate if the UK adopts this policy. Taxes are too high for aviation, said Mr Anderson, and a policy framework should be developed which allows growth within environmental limits. He continued by mentioning that APD, which is due to rise again in the near future, is a revenue raising measure, not an environmental measure.
Following Ed Anderson, Graham Brady responded to the issues raised. Using the example of Manchester Airport, near his own constituency, Mr Brady said that airports can be a major source of employment and a driver of economic growth. It was highlighted that the economic recovery must be export led and to penalise exports through a PPD would hinder that recovery. It was agreed that Britain needs a level playing field in terms of taxation, otherwise the UK would lose out to international competition.
Following Graham Brady, Mathew Sinclair of the TPA said that, whilst the logic of green taxes sounds persuasive to Governments, they are too complex and do not deliver the social justice they are designed to. Aviation taxes he said have been ineffective and an increase in APD could actually lead to an increase in emissions. Mr Sinclair suggested that there should be a carbon market that sets natural prices and, if people still choose to fly, that should be their decision. With reference to Heathrow Airport, Mr Sinclair also said that, with no Government money and investment in transport infrastructure badly needed, to block the third runway was “infuriating”. Reference was made to the fact that, while China were building 100 new airports, there was so much argument in Britain over just one runway.
It was great that air travel had been democratised, he insisted, and that more and more British people could now travel further and further. He accused the Conservatives of merely opposing the runway without outlining their policy on air travel and went further saying, “to oppose air travel is to oppose aspiration”.
Brian Walden, a Conservative Member, asked the panel how the aviation sector could be expected to grow within the context of the emission reductions demanded by the Climate Change Act 2008. In response Ed Anderson said that the AOA supported the Climate Change Act and believed that aviation could still grow by up to 60% through greater innovation.
Graham Brady reiterated this point and highlighted a simple case from Manchester Airport where two freight flights a day had been replaced by one in a larger plane. He also said PPD may simply force a flight to land at Schiphol instead of Manchester. Then ship the goods by ferry to Dover before taking them by road to Manchester, hence increasing emissions.
Mathew Sinclair said the Climate Change Act 2008 was part of a proposed global deal that has failed. The UK, he argued, should not act unilaterally and should instead think about finding technological solutions to climate change that would have far greater global reach than simply cutting domestic emissions, whilst invigorating British industry.
Ross Fez, of the North East Chamber of Commerce, asked about the role regional airports would play, especially in the face of proposed high-speed rail links. Mathew Sinclair, with the agreement of Ed Anderson, said that high-speed rail would never replace air travel. Mr Sinclair emphasised the importance of aviation speaking with one voice and representing airports as a network. Graham Brady also mentioned that if Britain had high-speed rail between Birmingham and London it would increase demand at Heathrow.
On the subject of Heathrow Airport, Roger Taylor, a Councillor from Halifax, asked the panel whether they were for or against the third runway. Mathew Sinclair said he was for it; at a time of economic downturn argued Britain should not reject big infrastructure projects. Graham Brady said the UK needed an international hub airport and asked, “if not at Heathrow, then where?”. Ed Anderson said the AOA were in favour of the runway and also challenged the Government saying it was clear they were against the runway but the jury is out on what they support.
On the subject of the so-called ‘Boris Island’ airport in the Thames estuary, the panel was unanimous in saying that it was an unworkable idea and had no future. A question from the Association of British Travel Agents (ABTA), asked for the panel’s opinions on the recent target, announced by the Prime Minister, that 50% of British holidays should be domestic. Mr Anderson, of the AOA, said that this target was wrong and agreed with Mathew Sinclair’s earlier comment that air travel was democratic, and should remain so. Mathew Sinclair said that it was not the Government’s business to tell people where to go on holiday and said there should be more foreign holidays. Graham Brady was in broad agreement with this stance.
Sourced from Dehavilland http://www1.dehavilland.co.uk/home