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Rishi Sunak cut air taxes and blocked climate levy after airline lobbying

Exclusive: Sunak’s Treasury was lobbied by airlines over tax cuts, sparking accusations of government ‘favouritism’

Lucas Amin Ben Webster
12 March 2023, 9.31am

Rishi Sunak halved has aviation tax on domestic flights


Liam McBurney/alenaohneva / Getty / Pexels. Composite by openDemocracy

Rishi Sunak slashed aviation tax on domestic flights and rejected a new ‘frequent flyer levy’ after lobbying by the airline industry, openDemocracy can reveal.

The decision to halve air passenger duty (APD), which takes effect next month, will mean more flights and less rail journeys in Britain – undermining the government’s net-zero commitment.

Clean transport campaigner Matt Finch, the director of Transport and Environment, told openDemocracy: “Simply taxing airlines in the same way that all other UK companies are taxed would bring in precious funds to the Treasury, and stop the ridiculous favouritism shown to airlines.”

He added: “It's clear that the aviation sector gets preferential treatment from the government, but it's unclear exactly why.”

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In June 2021, when Sunak was chancellor, Ryanair’s director of route development told the Treasury that APD “should be abolished in order to stimulate immediate traffic growth”, documents obtained by openDemocracy under Freedom of Information law reveal.

Ryanair said it could offer “ultra-low” domestic fares if the tax was reduced. It has responded to Sunak’s cut by sharply increasing flights from London, adding three a day between the capital and Edinburgh and three a week to Newquay, Cornwall.

Responding to the Treasury’s June 2021 consultation on the plans, British Airways’ owner, International Airlines Group (IAG), and easyJet also said they supported APD tax cuts. IAG said “positive outcomes could include new routes, increased frequency and larger aircraft on existing routes as well as lower fares”.

EasyJet said: “Our analysis shows that if domestic APD is reduced by 50%, this would

support an overall 31% increase in domestic volume to 10.6 million passengers.”

But the UK’s rail industry warned that cutting air taxes would lead to 222,000 passengers shifting from rail to air each year, equivalent to an extra 1,000 domestic flights. The Rail Delivery Group said that reducing the cost of flying “runs counter to government's legal commitment to decarbonise” and could increase carbon emissions by 27,000 tonnes a year.

Sunak ignored the warning and in October 2021 announced a 50% cut to APD on domestic flights, from £13 to £6.50.

It’s clear that the aviation sector gets preferential treatment from the government, but it’s unclear exactly why

Matt Finch, Transport and Environment

Silviya Barrett, the director of Policy and Research at Campaign for Better Transport, said: “In the context of the climate emergency, it's hard to think of a more wrong-headed policy than making domestic flights cheaper. Not only will it encourage more polluting travel, but it will reduce revenue which could and should be invested in sustainable alternatives.”

France is taking the opposite approach by banning domestic flights between cities that are linked by a train journey of less than 2.5 hours.

The railway industry’s ability to compete with cheap flights was further undermined last week when the government increased rail fares by up to 5.9%, the biggest rise for 11 years.

The airline industry already benefits from the absence of tax on jet fuel and no VAT on airline tickets. A study last year estimated that taxing jet fuel in the UK at the same rate as road fuel would have raised £6.7bn in 2019. The sector generates around 8% of UK emissions.

Sunak, who now travels around Britain in a private jet, also rejected a recommendation to introduce a progressive tax on frequent flyers.

The Climate Change Committee has found that a “frequent flyer levy” –which makes those who fly more often pay progressively more tax – is a fairer way of taxing aviation.

Research shows that just 15% of Brits take 70% of flights.

It’s hard to think of a more wrong-headed policy than making domestic flights cheaper

Silviya Barrett, Campaign for Better Transport

Nine in ten people back the idea of a frequent flyer levy, according to a survey by conservation charity WWF and think tank Demos, but Ryanair told the Treasury not to do it.

Ryanair argued that a frequent flyer levy would be “likely only to punish passengers that have an ongoing practical requirement to fly frequently”, while IAG told the Treasury that “taxing aviation does not benefit the environment”.

Grahame Morris, a Labour member of the House of Commons Transport Select Committee, told openDemocracy: “It is counterintuitive of this government to remain committed to ‘Jet Zero’ by 2050 and at the same time to reject a frequent flyer levy while alternative sustainable aviation fuels to replace existing fossil fuels are still under development and evaluation.”

A government spokesperson said: “We are absolutely committed to levelling up the UK and delivering on our net-zero commitments, which is why from April we are cutting duty in half for flights within the UK, except for private jets, and introducing new higher rates of duty for ultra-long haul flights, ensuring that those who fly furthest contribute the most.

“In line with the tax policy-making process, we consulted on a frequent flyer levy in 2021, which a wide range of stakeholders fed into. Having considered views, including around privacy and data concerns of implementing such a levy, we concluded that Air Passenger Duty should remain the principal tax on the aviation sector.”

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