Airports lose £83 million a week, study finds, as they call for passenger duty 'holiday' and VAT-free sales

Charles Hymas
·2-min read
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UK’s airports are losing £83 million a week due to Covid-19, according to an industry analysis, as they urged the Government to suspend air duty on passengers and retain VAT-free sales airside.  

The Airport Operators Association said the Covid-19 pandemic had brought international aviation to a near standstill with a projected loss by the end of the year of £4.3 billion for 2020.  

The AOA said the £83 million a week loss represented a significantly bigger cost to the economy because of a multiplier effect from associated businesses that rely on trading from the top 20 airports in the UK.  

It is urging chancellor Rishi Sunak to soften the blow by introducing a 12 month break in air passenger duty for which travellers are charged between £26 and £150 and which has raised an estimated £3.7 billion a year.  

The AOA is also appealing plans by Mr Sunak to end duty-free bargains at airports on goods including perfume, clothing and electronics from January 1 for all outbound passengers.  

Tax savings will only apply to sales of alcohol in a move described as a ‘hammer blow’ to struggling airports. As much as 40 per cent of their income comes from airside retailers.

The airports are also seeking relief from business rates payments for 2020-2021 in line with the relief granted to the hospitality and retail sectors, which would aid companies’ cashflows. Such support has been given to airports in Scotland and Northern Ireland.  

They have previously written to the Prime Minister calling for the urgent introduction of testing to help restore travel although the AOA said it would be enough on its own to revive the sector and financial support would still be needed.  

Karen Dee, AOA chief executive, said: “UK airports have done everything in their power to weather the storm and have done so without the specific Government support afforded to other sectors.   

“That they are losing £83 million per week must serve as a wake-up call to the Government and lead to the delivery of the promised Aviation Recovery Package of support.   

“As we approach the challenging winter months the Government must support the industry through the introduction of business rates relief for airports in England and Wales, continuation of VAT-free sales airside, funding for the CAA, a temporary suspension of APD and a longer-term package of financial support that promotes, protects and enhances our global connectivity as our sector looks towards the long journey to recovery.  

“Damage now to Britain’s connectivity will take years to repair, harming all our ambitions for the UK in the global marketplace.”  

“Last week’s commitment to testing was a welcome first step, but we need the Government to understand the brutal reality facing UK airports. These projections show that the time for deliberation has passed, and it is essential that they deliver this support and deliver it now.”