IATA criticises UK Government on Air Passenger Duty

April 28: In its release of traffic data for March, the International Air Transport Association (IATA) thinks an upturn in aviation’s fortunes may not be too far away.

“The global economic crisis continues to reduce demand for international air travel,” said Giovanni Bisignani, IATA’s Director General and CEO. “Airlines cannot adjust capacity to match demand. Load factors have dipped sharply from last year. All of this is hitting revenues hard,” he said. “The only glimmer of hope is that cargo demand has stabilised this month, although at a shockingly low level. It’s not the end of the recession, but we may have found the floor.”

However, new concerns over swine influenza could have a significant impact on traffic. “Safety, as always, is our number one priority. IATA is working in close co-operation with the World Health Organisation to ensure an efficient response of the air transport industry to the challenges that swine influenza will present,” said Bisignani. “It is still too early to judge what the impact of swine flu will have on the bottom line. But it is sure that anything that shakes the confidence of passengers has a negative impact on the business. And the timing could not be worse given all of the other economic problems airlines are facing.”

Noting the deteriorating financial situation of many airlines, Bisignani urges governments to move forward with liberalisation – particularly of the archaic ownership restrictions that prevent cross-border access to capital and consolidation. “Air transport is an economic catalyst and can play an important role in driving recovery, but only if we are financially sound. Access to global capital and the freedom to consolidate would go a long way to shoring up this industry – without government bail-outs,” said Bisignani.

“Unfortunately, instead of using airlines to drive growth, many governments see us as a cash cow. It is shockingly disappointing that the UK Chancellor is continuing with plans to raise the UK Air Passenger Duty in the middle of this economic crisis. When the government should be doing everything possible to stimulate the economy, it makes no sense to dampen demand for air travel with increased taxation. Look no further than the Netherlands where collecting an extra EUR 312 million in extra revenues with a new departure tax cost the economy up to EUR 1.2 billion in lost revenue. The Dutch had the good sense to abolish the tax. Let’s hope that others will follow.”

The Dutch Government is helping stimulate its economy through an aviation policy document submitted to Parliament by Camiel Eurlings, the Minister of Transport, Public Works and Water Management, and Jacqueline Cramer, the Minister of the Environment and Spatial Planning, who say the Netherlands has an important part to play in European aviation.

To strengthen the country’s competitiveness, the government is abolishing aviation tax and supporting measures that aim to promote quieter, cleaner flights. By 2040, the Netherlands wants to make Schiphol the world’s first climate-neutral airport.

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