31 December 2010

The Coalition Government is studying plans to charge higher taxes on flights from the South-East and lower taxes on journeys from airports in other regions such as Northern England. Under plans to reduce congestion at South-East airports, hundreds of domestic and European flights will be stripped out of Heathrow with Birmingham used as a London overspill airport.

 Aviation Minister, Theresa Villiers, spoke at the ‘New Direction for Aviation’ conference in London on 26 January 2011 and explained that a reform of Air Passenger Duty (APD) next year could introduce different tax rates to help relieve overcrowding at London airports and allow regional airports to flourish. The Treasury is currently drawing up plans to overhaul air taxes, and is expected to launch a consultation during the Budget in March 2011.

 Since 2006, APD has risen more than four-fold, with the latest increases taking effect from November 2010. The tax now raises around £3.8 billion a year for the Treasury. BAA Ltd has stated that any new differential tax penalising the South-East would make it harder to compete with airports such as Frankfurt, Amsterdam and Paris for flights to emerging economies such as India and China.