Heathrow Airport urges UK government to reconsider VAT-free shopping

Heathrow Airport, a critical gateway for global travel, has issued a warning against the adverse impacts of the UK’s recent abolition of VAT-free shopping, thisismoney.co.uk has reported.

Describing the move as a ‘tourist tax’, Heathrow highlights the detrimental effects on inbound tourism and the broader economic landscape. Teaming up with influential bodies including the British Chambers of Commerce and the Federation of Small Businesses, Heathrow is leading a campaign to reinstate an internationally competitive tax-free shopping incentive.

‘While exports are thriving, Britain has shut the door on home-grown growth, turning away international shoppers through the tourist tax and tarnishing the UK’s reputation as a competitive country to spend and do business with,’ Heathrow said.

The decision to eliminate VAT-free shopping, enacted three years ago under former Chancellor Rishi Sunak, has drawn widespread criticism from retailers, companies, and brands across the UK.

Heathrow urges reinstating this vital incentive, noting its pivotal role in driving economic growth and supporting job creation. Despite concerns raised by HM Treasury regarding the associated costs, independent studies indicate the potential for a significant boost to the economy, projecting an injection of over £10 billion annually and the creation of approximately 78,000 jobs.

The Office for Budget Responsibility is to conduct a comprehensive cost-benefit analysis of the ‘tourist tax’, providing some optimism for a reversal.

Heathrow Airport has further commented that recent passenger statistics indicate a gradual recovery in travel volumes following the pandemic. Despite the progress, regulatory constraints pose challenges to the airport’s earnings potential, necessitating a balanced approach to recovery efforts, the report noted.

Flybe urges Government to scrap air tax on all internal flights

Flybe, one of the leading European regional airlines based in the UK, has urged the UK Government to scrap or significantly reduce a controversial air tax, The Belfast Telegraph has reported.

Domestic travellers pay a premium levy per mile that is 38 times the amount paid by long-haul passengers, Flybe claims. The company has sent an open letter to Chancellor George Osborne calling for the reform of air passenger duty (APD) to benefit passengers.

The highest tax of its type in Europe, the UK APD is also one of the highest in the world. Currently the basic domestic rate for APD is £13 – an amount paid twice on return trips.

Saad Hammad, the chief executive officer of Flybe, said that the Treasury had overlooked the way in which APD has disadvantaged regional travellers on a per mile basis in comparison to those travelling short-haul to Europe, and particularly those travelling long-haul.

The basic domestic rate for APD is £13, which would mean a traveller on a one-way trip from Manchester to the Isle of Man (109 miles) would pay £13. Meanwhile, if he were to travel from Manchester to Auckland (11,311 miles), he would pay £71. ‘This represents a tax premium per mile of 19 times for the UK domestic business traveller over the long-haul traveller,’ Hammad said.

He added that domestic travellers also ended up paying APD twice on return trips (because APD is a departure tax), whereas international travellers only have to pay it once. So, effectively, ‘the domestic traveller pays a tax premium per mile of 38 times!’ he said.

Flybe also emphasised that a return domestic flight should only have APD levied on it once. ‘There is absolutely no logic in such an unfair, discriminatory tax regime,’ Hammad said. ‘The availability of affordable, high-quality air service connectivity is fundamental to the economic prosperity of the whole of the UK.’

Meanwhile, a Treasury spokeswoman said that there were no plans to get rid of the levy. However, she said that the Government was committed to ensuring that APD was a fair levy for passengers.

‘That’s why we’ve made it cheaper to fly through freezing APD for most passengers since 2012, exempting children and reducing the number of bands, meaning it’s now lower for many more long-haul destinations,’ she said.


Major British airlines urge EU to protect passenger interests

The chiefs of three major British airlines have come together as a group to oppose European Union (EU) passenger taxes and policies that are hiking up the costs for customers, reports said.

Carolyn McCall, Michael O’Leary and Willie Walsh, the chief executives of easyJet, Ryanair and British Airways owner International Airline Group respectively, have joined forces with the heads of Lufthansa Group and Air France KLM and agreed to lobby EU officials for change of policy and a simpler regulatory structure.

The airlines chiefs demanded the European Union provide a more efficient and competitive market to protect passenger interests, and guarantee jobs and business growth.

‘Europe’s airlines form the most competitive sector in aviation, with a diverse mix of carriers offering competition and choice to consumers,’ the airlines’ chiefs said in a joint statement.

‘This is the first time we have set aside our competitive battles to highlight the importance of a new European Aviation Strategy. As the new Transport Commissioner prepares a new Aviation Strategy for Europe she must drive more competition, encourage more efficiency and help reduce costs in other parts of our industry (such as monopoly airports and Air Traffic Control providers) and reduce the tax burden on passengers,’ they added.

Presently the European Union is ‘in effect taxing an enabler of economic activity’, IAG chief Walsh said. He added that that passenger taxes are counter-productive and urged for the cancellation of the ‘unreasonable’ charges.

The airlines chiefs particularly called for affirmative action over disruptive European airstrikes that cost the industry millions every year. According to Ryanair chief O’Leary, strike days have resulted in over 3,000 cancelled flights this year alone.

The top executives also called for reforms to lower the cost of European airport charges that would allow them to reduce fares for customers. The cost of European airports is among the highest in the world and a new strategy must achieve ‘real progress soon,’ the executives said.

Ryanair to refund children’s APD on UK flights from March

Ryanair, the Ireland-based low fares airline, has confirmed that it will refund the £13 UK travel tax for all children aged under-12 who check-in on flights departing the UK from May 1, 2015 earlier than required.

The announcement comes after the decision by UK Chancellor George Osborne to abolish children’s APD starting from May 1, 2015.

However, Ryanair went further to add that it will refund children’s APD on UK flights for the six weeks from March 27, 2015. The airline also urged the UK Government to abolish APD, enabling UK tourism to return to growth.

Refunding the UK APD for kids over the Easter Holiday period is expected to cost Ryanair up to GBP2m. The move – along with Ryanair’s ‘Family Extra’ service – will allow children to fly from the UK tax free for the holidays.

Ryanair’s Chief Marketing Officer, Kenny Jacobs, said: ‘Ryanair welcomes Chancellor Osborne’s decision to scrap APD for children under-12 on flights departing the UK from 1st May 2015. To ensure even greater savings for the millions of UK families flying Ryanair at Easter, Ryanair will refund APD for all children who check in on flights departing the UK from 27th March 2015 onwards. Families flying Ryanair already enjoy the lowest fares and fantastic discounts with our ‘Family Extra’ service and this will ensure even more UK families make even greater savings next Easter flying with Ryanair.

While we welcome this partial reduction in APD, we call on the UK Government to abolish APD, and allow UK tourism to return to growth and become competitive once more. Tourist traffic in Ireland has risen by almost 10% since APD was abolished in April, with the VAT received from the additional tourist spend far exceeding the loss of APD. The UK should follow suit and axe the tax for all.’

The refund is the latest in a series of customer experience improvements under Ryanair’s ‘Always Getting Better’ programme, which includes a new website, a new mobile app, and the new ‘Family Extra’ and ‘Business Plus’ services.

Separately, Ryanair said that it will open its fourth Portuguese base in the Azores from April 2015 with one based aircraft and three new routes to London Stansted, Lisbon and Porto.


Travellers Told ‘Complain to Your MP About Rise In Air Passenger Duty’

An alliance of more than 30 airlines and tour operators is encouraging travellers to complain to their MP’s about increases in Air Passenger Duty.

The alliance, calling itself ‘A Fair Tax on Flying,’ is also intending to create a list of at least 100,000 signatures of travellers that are disgruntled by the tax increases, which have seen APD rise by 360 percent in the last 7 years. Depending on distances travelled, APD can now add as much as £368 to the flight cost for a family of four, which the alliance say can deter British holidaymakers from travelling abroad and foreign visitors from visiting the UK. Taxes for premium seat passengers can double.

The alliance claims that, ‘Only five European countries tax passengers when they fly overseas and UK rates are twice the level of the next most expensive tax (which is in Germany). A Fair Tax on Flying campaign has calculated that the Treasury collected more than twice as much in passenger taxes in 2011 than the all other European countries that levy a tax combined.’

By visiting www.afairtaxonflying.org and registering their personal details, complainants can have a letter sent in their name to their local MP. It is claimed that in excess of 1,000 people supported the campaign in its first day. The letter reads, ‘Many other European countries, including Holland, Denmark and Belgium, have scrapped their APD because of the impact it was having on families and the wider economy. I ask that you write to the Chancellor to request that the Treasury undertakes research to determine the impact of APD on UK holidaymakers, employment and economic growth.’

The alliance, which includes British Airways, TUI Travel, the British Airline Pilot’s Association and many more major names in the travel industry, has launched a Facebook page to support the campaign at www.Facebook.com/afairtaxonflying.

Air tax damaging to the UK economy

Removing Air Passenger Duty would result in an additional 91,000 British jobs being created and £4.2 billion added to the economy in 12 months, it has been revealed.

The research, by World Travel&Tourism Council (WTTC), shows that comes as Britain is about to face yet another rise in Air Passenger Duty. Increases planned from April mean a family of four flying to Malaga will pay £52 extra on the price of their tickets. This rises to £260 for the same family to fly to Florida and £368 to fly to Australia.

David Scowsill, WTTC President&CEO, said: “Air Passenger Duty is a completely disproportionate tax on people’s holidays and is hitting business travel hard. When the economy needs help, it is economically illogical to continue with a tax that costs the country some 91,000 jobs and as much as £4.2 billion.”

In the next 12 months, the UK government will collect £2.8 billion in extra tax from air travelers, far more than any other country in the world.

David continued: “Travel and tourism grew by 4.1 percent in the UK last year, but is forecast to slow to 1.3 percent in 2012. This slowdown is partly due to the impact of Air Passenger Duty, which is dampening demand.

“This tax is damaging the economy at a crucial time and is having a negative effect on trade with countries in the Caribbean, Africa, and Asia. We urge the UK government to recognize the impact on the overall economy and reduce Air Passenger Duty.”

Martin Craigs, CEO of the Pacific Asia Travel Association (PATA), said: “The UK is an island trading nation; air services are the vital lifeblood of modern global commerce. The UK Air Passenger Duty is now the world’s highest by a wide margin. It is certainly turning away tourism and trade from the world’s fastest-growing economic region, Asia Pacific.

“Airport Passenger Duty started in1994 at £5 and some worthy intentions to offset aviations carbon footprint. Today at £85 to zone D (Asia/Pacific) it’s a ‘detention tax’ that’s restricting job growth, alienating important trade partners and not being transparently directed to green projects. Airport Passenger Duty maybe easy to collect but it’s also easy to see its macroeconomic damage.”

Air tax rise to affect 6.5 million travellers

An estimated 6.5 million people are to be affected by the rise in Air Passenger Duty tax.  Travellers who have booked flights for April 2012 onwards will be forced to pay an additional fee towards their flights, even if they’re already paid for.


The decision on whether Air Passenger Duty will increase is expected to be announced at the end of this month, during the Chancellor’s Autumn Statement on November 29.


Flights taking place after April 1 are to be affected by the rise, even if the tickets for the flights were purchased before April.


Virgin Atlantic have announced several thousand passengers have already booked trips out of the UK through the airline, and may be affected by this rise.


The company have said that the increases should be introduced with a 12-month lead-in time to avoid applying these costs to passengers who have booked their flights early.


Chief Commercial Officer Julie Southern said: “We are very concerned that the Chancellor has failed to rule out retrospective rises in Air Passenger Duty”.


“Hundreds of thousands of our customers could be affected by this, and industry-wide the numbers will be greater still, with millions of people contributing tens of millions in extra payments to the Treasury’s coffers”.


She added: “UK aviation taxes are already some of the highest in the world, and a retrospective application combined with a double-inflationary increase would make matters even worse”.


Virgin have revealed if the Governments proposal goes through APD could increase to a staggering £3 billion.


The expected hikes will see an average tax increase of 10 per cent, however some journeys may experience a rise up to a third.


A survey of tour operators, hoteliers and restaurants last month has revealed that these businesses expect to see a five per cent decrease in bookings next year due to the APD rise.


APD increased by as much as 55 per cent last year on some long-haul routes, with short-haul flights increasing by 10 per cent.


If Airport Passenger Duty tax is to rise in April, this will signify the fourth APD hike in five years.


Article by Charlotte Greenhalgh


Tourist tax suggested to protect Cambridge

When most of Britain is trying to encourage tourism, one of the most popular cities has said they have to many visitors.


Cambridge is so worried about too many tourists that it is considering taxing them to protect the historic town from over crowding.


The former Mayor said his ideas to limit budget hotels so that visitors couldn’t come for mini breaks, and introduce an obligatory Cambridge Pass for tourists to buy, were ‘draconian’, but claims they are necessary.


Cllr John Hipkin wants to turn Cambridge into a high-quality heritage and culture place and thinks tourists should be subsidising public services in the city.


He has said that tourists ‘take-over’ parts of the city, and residents no longer go there. For example Quayside and King’s Parade are said to be ‘off-limits’ for locals.


Cllr Hipkin said: ‘Some will consider these suggested measures to control tourism draconian and so they may be but, without strong policies to stabilise or reduce tourist numbers, the character of the city and its amenities, especially in the peak season, will continue to deteriorate.


‘We need a new vision of Cambridge as a tourist destination and all those who care for the city must unite to ensure that it is realised.


‘The vision is of a high calibre, long-stay heritage and culture city at the hub of connections to nearby sites of historic and natural interest.


‘Casual short-stay tourism should be discouraged.’


Cllr John Hipkin has cautioned that the city is becoming overloaded with tourists, with four million visiting every year.


But Diane Thompson, general manager of the Royal Cambridge Hotel, said attracting a range of tourists was what keeps the cities economy going.


She said: ‘I don’t think we can turn on one tap and switch off another because it doesn’t work like that.’


Tourist tax begins in Venice

Venice has become even more expensive for tourists, when last week the ‘tourist tax’ came in to force.

When plans emerged from the Venetian authorities last year about the plans to charge tourists a fee for overnight stays, they were met with critisism.

Tourists wanting a relaxing weekend break will now have to pay as much as €5 per person.

The fee is determined by hotel star-ratings, with a couple staying in a 3-star hotel paying an extra €6 on top of the bill.

Luxury travellers staying at one of the city’s gilded five-star options – such as the celebrated Hotel Cipriani – will have to pay the full €5 each.

Defending the ‘tourist tax’ Venice has suggested it is a cultural donation rather than a government levy interested in squeezing a little more from its tourist economy that sees 60,000 people visit every day.

Imposed to protect the city, the imposta di soggiorno, is said to be needed to protect the heritage of Venice which was once at the centre of the European empire.

‘This tax is a new and important opportunity for the city,’ Venice’s deputy mayor Sandro Simionato recently said. ‘The fundamental objective, which will also involve tourists who visit and love Venice, is to save this unique city, which is precious and fragile.’

A brochure outlines the reasons behind the new tax.

‘You will become one of the city’s sponsors, contributing to safeguarding it,’ the brochure explains.

It is illustrate with a sticker that states: ‘Thank you for being a sponsor of the splendour of Venice.’

Mr Simionato’s also stated:

‘The tax will help finance tourism, maintenance of cultural heritage sites, the environment, as well as public services’.

This may not please the tourists that will now be sponsoring domestic funding for the city.

Local authorities will be allowed, through government rules, the spend revenue on public services – tourists could end up paying for matters that should be covered by Italian tax euros.

Venice accommodation tax delayed

Following scenes of protest, walkouts by certain councillors, and ultimately a lack of quorum, the debate and vote on Venice’s proposed accommodation tax was delayed on Monday evening (June 20). Outside the chambers, people held up banners decrying money being wasted and suggested that not just tourists but also locals will feel more tax burden under the various proposals on the table.
The fallout from these events is that the council reconvened on Thursday, June 23 and that any resolution would mean that an accommodation tax is unlikely to come into force before August 23.

Prior to the council meeting, Mayor Orsoni held conciliatory meetings with the local hotel association, which has expressed its opposition and made clear that it sees managing tourism in the city as a very delicate balancing act. While the proposed tariff system is very similar to Florence’s (one euro, per star, per person, per night), there remains some uncertainty about whether Mestre and minor islands would be charged a lower rate.

“This is an interesting development, even surprising, given that initially this vote was seen as a formality,” said Nick Greenfield, Head of Tour Operator Relations at ETOA, “ETOA has spoken in the past about the need to consult with the travel industry and also to work to a realistic and sensible timetable that respects business cycles. Rome and Florence have caused a lot of bad will by introducing these taxes in a very haphazard, last-minute way. Perhaps, belatedly, Venice will now recognise the need for dialogue and clarity.

“Venice is a unique city, a very popular destination, and tourism is crucial to its economy. The city faces some challenges in terms of infrastructure; the very nature of the place means that it feels pressures that other cities do not. The way to move forward is to involve our industry at every stage to ensure that the future of the city’s most important sector is in safe hands.”