BA Lose Out In Coalition

14/05/10

BA Biggest Losers in Coalition

British Airways looks like it has come off worse with the new formed coalition government formed between the Conservative and Liberal Democrats. As the main two policies coming out of the transport sector are to replace the unpopular air passenger duty (APD) and replace it with a tax on planes and the scrapping of the proposed third runway at Heathrow.

The new tax on planes is supposed to target airlines with older fuel hungry planes, that fly half empty thus resulting in less money for the exchequer. A BA spokesman stated that the current APD is not used to fund environmental benefits and there was no guarantee a new tax on planes

would.

BA argued that aviations impact on climate change will be better addressed by the inclusion of airlines from within the EU emissions trading scheme, stating that emissions trading will reduce climate change whereas taxes will not.

This view though is not shared by rival airline Easyjet who command a newer fleet of aircraft and have long campaigned for APD to be discontinued in favour of tax per plane. Andy Harrison Easyjet CEO welcomed the proposal and called the current APD daft as it taxes full planes but not empty ones. This would also lead to a fairer and greener environment for the air travel passenger. He also claimed that Easyjet would carry 50 million passengers this year compared to BA’s 30 million.

The scrapping of Heathrow’s third runway was expected but the newly formed coalition has widened this stance to Gatwick and Stansted which will reduce the value of these airports to its current owners.