U.K. Sticks to Aviation Tax Plans, Incurring Airlines’ Scorn

The U.K. government is sticking to plans to increase a tax on commercial flights and start levying charges on business jets in 2013, drawing criticism from the nation’s aviation industry.

Modifications in the established air-passenger duty that were proposed by industry stakeholders are too costly to implement, the London-based U.K. Treasury said in a report on consultations it held on the tax.

“APD is primarily a revenue-raising duty which makes an important contribution to public finances, whilst also giving rise to secondary environmental benefits,” the government said. Officials agreed to some suggestions for the business-jet tax, and its implementation will be delayed until April 2013 because of the changes, it said.

Airlines estimate that the tax generates about 2 billion pounds ($3.1 billion) annually for the government and want it scrapped. The chief executive officers of EasyJet Plc (EZJ), International Consolidated Airlines Group SA, Ryanair Holdings Plc (RYA) and Virgin Atlantic Airways Ltd. said in a joint statement that the tax consultation process had been “a sham and a waste of taxpayer’s money,” and that the fee will hurt the economy.

British Airways, the U.K. unit of International Consolidated Airlines and the largest carrier at London’s Heathrow airport, said it will have to cut recruitment plans by half next year and postpone bringing a Boeing Co. 747 jumbo jet back into service because of the tax.

To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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