Gulf airlines have hit out at the British government’s decision to increase the tax on air passengers flying to and from the UK by eight percent, although it is not yet clear whether the extra charge will be passed onto customers.
As part of his budget last week, UK chancellor George Osborne revealed that air passenger duty (APD)would increase by eight percent from April and will rise again in 2013.
Gulf carriers have joined UK-based airlines, such as Ryanair, easyJet and British Airways, in condemning the move as bad for business.
“The UK government’s decision to proceed with the planned APD increase is unwelcome,” an Emirates spokesperson said in a statement.
“The UK already pays the highest aviation taxes in Europe and Air Passenger Duty (APD) levels do not take into account the EU Emissions Trading Scheme (EU ETS) which all airlines have been paying to since January 2012.
“Other EU countries like the Netherlands and Ireland reduced or removed existing taxes prior to the introduction of EU ETS. For air travellers to pay twice is wholly unjustified. Higher aviation taxes are not consistent with encouraging economic growth and would only limit airlines’ ability to continue to be wealth multipliers across the UK economy,” he added.
The Dubai-based airline is one of the largest international carriers serving the UK and currently operates 15 daily flights to Manchester, London, Birmingham, Glasgow and Newcastle. While Emirates did not confirm whether its UK fares would increase as a result, fellow Gulf carrier Royal Jordanian said it was likely the APD increase would be passed onto consumers.
“[The APD increase] should be paid by the lifting airlines on behalf of the passengers, however, the airlines cannot bear such tax value, thus it needs to pass it to the customer as they don’t have any other choice,” Guido Ruther, vice president of planning and commercial at the Amman-based carrier told Arabian Business.
However, Saj Ahmad, chief analyst at StrategicAero Research, believed it was likely the majority of Gulf carriers would absorb the extra cost in order to remain competitive on their UK routes.
“I don’t see GCC airlines hiking fares to match those in the UK – we have to remember this additional tax revenue is for government, not airlines, so any additional duties levied, such as those in the UK budget will not generate any extra revenue for UK based airlines,” he said.
“Importantly, I don’t see any knee-jerk reaction from Gulf carriers – they are far more adept at structuring pricing to remain competitive in contrast to EU airlines and can alter fares as and when they need to,” he added.