Levy on Frequent Leisure Flyers Proposed to Make Airport Expansion Unnecessary
Jun. 20, 2015
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Plans for a "frequent flyer" tax to curb demand for leisure flights and make a new runway in south-east England unnecessary have been unveiled by an influential group of transport campaigners, environmentalists and tax experts.
Ministers, and candidates seeking to be the next mayor of London, including Tory hopeful and green campaigner Zac Goldsmith, are being urged to back the proposals, which supporters argue in a letter to the Observer would relieve ministers at a stroke from having to make the invidious choice between expanding Heathrow or Gatwick airports.
Sir Howard Davies, former leader of the CBI and head of the Airports Commission, will report within a fortnight on how he thinks capacity can best be expanded in the south-east. He is expected to make a recommendation to develop either Heathrow or Gatwick, but may insist on tough environmental conditions being met by the "winner". These could allow ministers room to judge which option they believe would achieve the best balance between the economic benefits and environmental impact.
The decision is one of the most controversial and politically difficult facing the new Tory government. Expansion of Heathrow is being resisted by several Tory cabinet ministers -- including international development secretary Justine Greening and foreign secretary Philip Hammond -- whose constituencies would be affected, as well as by London mayor Boris Johnson. A group of Tory MPs is also campaigning against an expansion of Gatwick.
With debate intensifying, green campaigners, transport groups, economists and tax experts have joined to propose the radical plan, which they say would reduce costs for once-a-year holiday travellers, while hitting those who choose to fly regularly. They say it would also ensure the UK could comply with its obligations under the Climate Change Act.
Under the plan, backed by the Campaign for Better Transport, the New Economics Foundation, the Tax Justice Network, Greenpeace and Friends of the Earth among others, air passenger duty would be scrapped and replaced by a new frequent flyers levy. Everyone would be able to take one flight a year without paying any levy, but for subsequent journeys the levy would rise each time.
Using accepted methods to calculate the effect of price on demand, experts say the number of flights taken by the better-off for leisure purposes -- which account for much of recent growth -- would be cut to a level that would make extra airport capacity unnecessary.
In their letter they say: "Britain's skies are already some of the busiest in the world, and Howard Davies knows that these expansion plans cannot be made to fit with the UK's long-term commitments under the Climate Change Act. Contrary to aviation lobby rhetoric, a new runway is not needed to allow more international business flights, which have been declining steadily since the turn of the century.
"The hub airport argument is a smokescreen. In reality, growing demand for air travel is concentrated in the short-haul leisure sector and among a small, wealthy minority of the population. It is more of these flights that a new runway will in practice service.
"This growth in flights is driven by air fares that are kept artificially low through generous tax subsidies; aviation is exempt from fuel duty by international treaty and zero rated for VAT, alongside wheelchairs and baby clothes. Yet these tax breaks almost exclusively benefit the richest section of British society. Our analysis of passenger survey data shows that 15% of the UK population are taking 70% of all our flights, while half of us don't fly at all in any given year."
They argue the new levy would shift the burden "away from families flying to their annual holiday and on to the frequent fliers who are driving expansion. Our research shows that this would let the UK meet our climate targets without making flying the preserve of the rich - and without needing to build any new runways."
Stephen Joseph, director of the Campaign for Better Transport, said: "Replacing air passenger duty with a frequent flyers levy could, on the evidence so far, make it unnecessary to build any new runways. As the politics of airport expansion get more difficult, we think the government should look seriously at the levy proposal, to ensure that the richest who take the most flights pay the most tax."
John Stewart, chair of Heathrow Association for the Control of Aircraft Noise, which campaigns against expansion of Heathrow, added: "The beauty of this proposal is that it ticks both the equity and green boxes. It is a way of controlling the growth of aviation but still allowing ordinary families a holiday in the sun."
With business leaders impatient for a decision, the government has said it will not comment on airport expansion until Davies has reported. Sources have indicated that a decision on which option to back is unlikely until the end of the year. Some government insiders believe it will then be difficult to back expansion of Heathrow in the runup to the mayoral elections next May.