The-Impact-of-Air-Passenger-Duty-on-Airline-Route-Economics-4.pdf
Airlines UK has published a new report on the impact of Air Passenger Duty (APD). The research which was carried out by the independent consultancy Frontier Economics has a number of key findings:
- by increasing the cost of a ticket for passengers, the tax dampens demand and impacts negatively on connectivity;
- UK airports are losing out on over 65 new direct routes that could become viable if APD were abolished. These include:
- 20 domestic connections
- 31 short-haul connections (excluding the UK)
- 15 long-haul connections outside of London
- A sample of eight routes that have been dropped by airlines in recent years on the grounds that they were loss making could have all been viable if APD had been abolished
- APD was found to constitute as much as 50% of the price of an off-peak short-haul ticket (from UK to Poland) and 44% of the price of an off-peak long-haul ticket (from UK to Israel).
- By raising around £3.4 billion per year, APD represents around the same cost as the total aeronautical revenue (the money raised through charges paid by airlines) generated by all airports in the UK.
- Through analysis of 2017 schedules data at the 20 largest airports in the UK, by movements, demonstrates that a total of 66 new direct connections could potentially be viable if APD were abolished, such as:
- Domestic connections– examples include Liverpool to Southampton; Bristol to Leeds Bradford; and Edinburgh to Guernsey
- Short-haul connections(excluding the UK) – examples include Belfast to Madrid; Southampton to Barcelona; and Aberdeen to Munich
- Long-haul connections– examples include Bristol to Dubai; Edinburgh to Delhi; and Birmingham to Tel Aviv
- If an airline were to operate a new short-haul connection with an average load of 100 passengers, it would need to generate at least £1,300 per service just to cover APD, or nearly £500,000 per year for a daily connection. For domestic connections, where APD is levied on both the outbound and inbound legs, this rises to around £1 million per annum.
- If an airline were to operate a new long-haul connection with an average load of 200 passengers, it would need to generate at least £15,600 per service just to cover APD, or nearly £6 million per year for a daily connection. This is particularly important in the context of the advent of low-cost, long-haul travel.
The full report can be downloaded at the link below.
