I thought I was dreaming a whle ago. On BBC’s Breakfast, Michael O’Leary from Ryanair and Willie Walsh of the holding company that owns British Airways and Iberia were standing side-by-side having a go at the government about APD.
I don’t think I have ever seen them together before. And in agreement! In the old days when Walsh was boss of Aer Lingus in Ireland he and O’Leary regularly had verbal bouts of fisticuffs and it still happens today.
But just about every part of the travel industry has united in the face of increasing air passenger duty (APD) and what effect it will have. Of course, I could be cynical and say that the people worse hit by the tax and any more increases will be the trade itself as people cut back. So naturally, they are going to scream. But will people cut back?
The evidence from the Netherlands is that the tax did have a major effect and the government there quickly saw the writing on the wall and removed the tax. Not that the government was concerned with their own nationals leaving the country. It was the downturn in incoming visitors that lost them revenue and persuaded the change of mind. In Ireland, O’Leary was one of the strongest attackers of that country’s tax. Now it is set to disappear as we mentioned in CD-Traveller recently and the tax in Northern Ireland is to reduce.
Walsh called APD a tax on families and that 7.4 million fewer people flew out of the UK. That couldn’t have something to do with the economic climate could it or increases in charges for using credit cards to book and things like that? O’Leary said that airline profits wouldn’t be affected one way or the other. Hogwash, but the truth doesn’t make a great soundbite. All airlines will make more money if more people fly and more people probably will if APD is reduced or disappeared. Both evaded some of the questions posed to them and stuck to the family theme and the tax on holidays.
The only thing that will change the government’s mind is when it sees revenue from incoming visitors drop below that raised by the tax.
Both airlines have been joined by Virgin Atlantic (another old BA sparring partner) and easyJet which has provided an unlikely alliance. But there is some evidence beginning to come forth (we’ll let you have more soon) that regular holidaymakers – those that take at least one overseas holiday per year- are not so put off by APD. Yet. It seems to be affecting those that travel less often.

image copyright BBC 2011