Report warns aviation restrictions are hampering growth

A group of MPs and businesses have backed a report into the UK aviation industry which warns Heathrow restrictions are damaging the UK economy.

The All Party Parliamentary Group for Aviation's inquiry is urging the Government to rethink its policy to encourage growth and adopt a new approach to air passenger duty (APD) tax and fuel surcharges.

The report, which took evidence from around 60 organisations, also said that efforts should be made to 'ensure the UK retains and grows hub capacity' at Heathrow or a new airport, or risk being left behind by other countries.' It comes after the Government this week rejected proposals for a third runway at Heathrow airport.

Acknowledging the need for greater airport capacity, Chancellor George Osborne said the Government would be consulting over the next few months on where in the UK this would best be located.

He said: "I am very clear; we are an open trading nation and just as we don't want to shut down our ports or our railways, we don't want to shut down our airspace."

In the report, the Party's chair Brian Donohoe MP said: "Combined, a new approach could not only energise the sector but also provide a firm foundation for the UK's economic recovery."

"Few industries can deliver to the whole of UK plc and assist the Government in achieving its economic and social objectives."

The aviation industry raised £2.2 billion for the Treasury in the 2010/11financial year, representing 3.6 per cent of the UK's GDP and a contribution of £49.6 billion to the economy. It also supports around 921,000 jobs across the country.

Elsewhere, the report criticised the impact of APD tax on UK competitiveness, which it said posed a barrier to inward business and leisure travel to the UK, placing the country at a 'competitive disadvantage to other nations.'

A separate Fair Tax on Flying campaign attracted 100,000 signatures calling for the APD tax, which has increased by eight per cent this year, to be reduced.

APD is paid on journeys out of the UK and can be as much as £368 for a family of four going to Australia, said Brian Donohoe.

Director of the British Chambers of Commerce (BCC) John Longworth also criticised the APD and the fuel surcharge in a newspaper interview with the Daily Mail, calling for an expansion on Heathrow airport he said there was 'no alternative' for economic recovery.