Planes a priority but passenger levy must stay

THE CHANCELLOR yesterday signalled his support for more airports or runways in the south east of England – but airlines were left fuming after he again ignored their calls to halt a hike in air passenger duty.

George Osborne said the government must “confront” the problem of air capacity, though he shied away from backing either a controversial third runway at Heathrow or the Thames Estuary airport plan.

And the chancellor made no mention of altering the air passenger duty, sparking harsh words from a group of airlines.

“Yet again, the Treasury is pressing ahead with further rises without any analysis of their effect on the wider economy,” said the chief executives of EasyJet, IAG, Ryanair and Virgin Atlantic in a joint statement yesterday.

“In the absence of such a study, we must assume that the Treasury knows it cannot justify this job-destroying tax in overall economic terms. APD must be scrapped.”

The quartet have long urged the coalition to drop the tax on plane passengers, which is due to rise by twice the rate of inflation, or around eight per cent, in April following a freeze in 2011. The duty will cost passengers up to £92 per flight.

The levy is expected to raise £2.7bn this financial year, rising to £3.9bn in 2016, the Treasury has forecast. The CBI said Osborne “has missed an opportunity to reinforce that the UK is open for business.”