Fight or Flight: Green campaigners hit out at Sunak’s tax cut on domestic air travel

November 3, 2021

3 min read

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What's going on here?

Environmental campaigners have criticised the UK government’s plans to cut taxes on domestic flights as part of what they’ve described as a “shockingly bad” Budget.

What does this mean?

The government will halve domestic APD (air passenger duty – the tax levied for each passenger carried on flights within the UK) to £6.50 per flight from April 2023. This is said to leave around 9m passengers paying less to fly between England, Scotland, Wales and Northern Ireland. The Chancellor of the Exchequer, Rishi Sunak, said the measure would fix an imbalance under which people pay more tax to fly domestically than abroad, boost struggling regional airports and “bring people together across the United Kingdom”.

However, Paul Tuohy, Chief Executive of green lobby group Campaign for Better Transport, criticised the move, describing it as “utterly wrong-headed”. Such rhetoric represents environmental campaigners’ wider dismay at what they perceive to be an underwhelming Budget which failed to set out how the nation would fund its net zero carbon target and lacked green spending commitments.

What's the big picture effect?

The criticism comes as the UK is due to host global leaders at the two-week long COP26 UN climate summit in Glasgow, where countries from around the world will update their plans for tackling climate change. Although the government published its long-delayed net zero strategy last week, experts said it lacked detail on funding, despite a pledge from ministers to “embed” the 2050 target in spending decisions. Sam Alvis, head of green renewal at Green Alliance, said it was an “incredibly bizarre approach from the Chancellor to sideline net zero, which is one of the government’s major priorities, ahead of COP26”.

The planned cut to APD may have consequences for the UK’s commitment to achieve net zero, mainly due to the fact that the lower cost of plane tickets may encourage more people to take flights to travel between UK destinations, as opposed to less harmful modes of transport such as trains. Andy Bagnall, director-general of the Rail delivery Group, commenced that such a cut would lead to an extra 1,000 flights a year as 220,000 people shifted from rail to air. Such a rise in flights as customers’ preferred form of travel may incentivise investors to expand their portfolios into the aviation industry. But any moves like this will need to consider the ESG (environmental, social and governance) commitments of their clients.

However, it is important to note that APD has been raised on trips of more than 5,000 miles, in a move that will cost economy passengers £91. Treasury officials therefore believe that the overall effect of the changes to APD would be carbon neutral when the cut to levies for APD is balanced against the rise in ones for long-haul journeys. The new “long distance” rate may lead flight providers and travel companies to consider ways of offsetting this by creating new revenue streams, such as offering new and improved holiday packages for overseas sporting events.

So what does this mean for aviation’s relationship with the government’s net zero strategy? As a consequence of coronavirus restrictions, the aviation industry has suffered severe financial shortfalls. It has thus demanded more government support to preserve thousands of jobs during the pandemic, with the lowering of APD being a major issue. But with new worldwide commitments to address the climate crisis through COP26, a reassessment of the aviation industry’s position in the transport economy may be needed. As Dr Doug Parr, chief scientist for Greenpeace UK, comments: “The government needs to face up to the unavoidable reality that the aviation industry has to be smaller than it was before the pandemic”.

Report written by Charlie Parkman

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