Changes to aviation tax to hit long-haul flights

Airlines operating heavy aircraft and long distance flights will be hardest hit under aviation tax proposals released by the Treasury yesterday.

Under new plans, Air Passenger Duty (APD) is set to be phased out by November next year to be replaced by a per flight levy that charges aircraft based on their distance traveled and weight. The proposed taxes will affect all planes over 5.7 tonnes, including freight aircraft which were exempt from APD charges.

According to the Treasury report, the tax could be divided into three bands with proportionately lower taxes for the European economic area and flights of under 3,000 miles. Meanwhile, planes travelling more than 3,000 miles will be subject to higher taxes.

British Airways criticised the proposals insisting that the EU emissions trading scheme, which airlines will join in 2011, provided a more effective way of addressing for aviation's contribution to CO2 emissions. "Emissions trading leads directly to reduced emissions. Taxes do not. APD is not used to fund environmental benefits and there is no guarantee that a flight-based tax would, " the company told The Guardian.

But with aviation predicted to account for 21 per cent of the UK’s carbon emissions by 2050, the Treasury report insisted the proposed tax system would, "introduce fairer duty, more in line with the environmental impact of flights, including the distance travelled". It is hoped the scheme will incentives airlines to invest in lighter aircraft and introduce measures to operate fuller planes.

However, the report did not detail the level of the proposed taxes, prompting speculation on the scale of the impact on aviation emissions. David Symons, director of corporate services at green consultancy WSP Environmental, said that the proposed taxes would encourage airlines to fly planes fuller but warned that without a significant levy the impact on passengers could be minimal. "Flight costs have come down so far in the past few years that the scheme will only encourage people to change behaviour if the levy each person pays is significantly higher than today," he said.

A spokeswoman for EasyJet agreed that it is impossible to predict the effect on airfares until more details on the level of the tax are released.

However, the move is likely to place further pressure on corporate travel budgets and encourage more firms to embrace travel reduction measures such as video conferencing.

In related news, Airbus announced its plans today to fly a double-decker A380 on alternative fuel for the first time, according to a Reuters report. The fuel for the test flight between Bristol and Toulouse, France will be derived from natural gas. The announcement follows recent confirmation from Virgin Atlantic that it is to operate a biofuel-powered test flight later this month.