Abta is calling for “meaningful reform” of Air Passenger Duty (APD) ahead of the upcoming March budget.
Although the association welcomed news of a governmental review into APD and regional connectivity, it has contacted chancellor of the exchequer Sajid Javid asking for a comprehensive reform.
It argued changing the tax without properly considering the wider impact could undermine the UK’s global competitiveness.
APD is not an environmental tax, it said, and wider reform would help the UK reach its target of net zero emissions by 2050.
“We have today written to the chancellor explaining that APD now needs comprehensive review and reform,” said Mark Tanzer, Abta’s chief executive.
“Any reform in domestic duty at the expense of international duty without a wider review would only serve to undermine the UK’s international competitiveness and cause holiday prices to rise, whilst failing to address pressing environmental priorities.
“Meaningful reform, delivered in partnership with the industry, can maintain the country’s global competitiveness and support the government’s commitment to lead the world on reducing carbon emissions.”
This comes after the government helped to rescue regional airline Flybe by handing out an APD tax break.
Both Ryanair Group chief executive Michael O’Leary and IAG chief executive Willie Walsh have since complained the deal was in breach of competition law.
Tim Alderslade, chief executive of Airlines UK, the trade body for UK registered airlines, said double taxation of domestic aviation is a “damaging anomaly that adversely impacts UK regional aviation”.
He added: “Increasing APD does not benefit the environment, and APD is not the right way to incentivise behaviour.
“Rather, it serves to hamper investment by airlines in new, more environmentally friendly aircraft and in the development of alternative fuels and technologies. Today, most UK airlines operate with very high-load factors and modern, fuel-efficient fleets.
“This is at the heart of an airline’s business model, because it is simply uneconomic to fly half-empty aircraft or planes that do not have the best available fuel efficiency.”
Justin Francis, Responsible Travel’s chief executive, added that the company has being lobbying for a ‘Green Flying Duty’ to generate cash for research and development into lower carbon transport.
He said: “However, I would also like to see recognition from the industry that any workable green tax would also need to include rate increases, over and above the current APD rates – particularly for domestic as well as first class and business class.
“There is no escaping the fact that aviation fuel is currently untaxed and is subsidised by the taxpayer instead. A fair tax would not stifle the UK’s ability to trade competitively, as we already have access to a vast network of routes and low fares due to an oversupplied aviation sector – APD has not stopped this.”