A lot of fuss is made in some quarters about the fact that airlines don't pay duty on aviation fuel. This makes it cheaper to travel by air, we are told, than by surface transport.
It is true that travel by air is generally cheaper than surface travel in the UK. It is also more comfortable and generally more reliable. From a capitalist perspective, it's not surprising, because air travel is in many ways a deregulated, commercial market. Where there is regulation (for example, in the carriers that can offer the prized routes from London to the US), prices are kept substantially higher than where regulation has been removed. Different providers have had to fight for market share through competition - which has meant investing in the service they provide, driving down costs, and marketing themselves effectively.
In the meantime, the road network is blocked up by private cars (also the fruit of a capitalist system, I guess) and trucks carrying freight that ought to be travelling long distances by rail. The rail network swallows substantial public subsidies, can't apparently afford to invest in improving infrastructure, and generally doesn't offer a pleasant passenger transport experience.
The UK government nonetheless does tax the aviation industry - through Air Passenger Duty, which will be doubled from early next year, and which has no counterpart for rail, bus or sea transport, as far as I know. At the short end of flights, as it happens, the amount of duty levied per seat is comparable to the amount that it would cost if fuel were taxed. Let's suppose that aviation fuel were taxed at 40p per litre. What effect would that have on ticket prices? The fuel burn in a typical narrow-body aircraft from London to Edinburgh is about 2400 kg, and given the density of fuel, this equates to around 3000 litres. At 40p per litre tax, this represents £1200 tax per sector. If the aircraft is carrying 120 passengers, then the additional cost would equate to £10 per passenger - a price similar in size to that of APD.
However, I estimate that a 777-200ER flying from London to Los Angeles might burn around 120 tonnes of fuel. That's around 150000 litres. The tax on the flight would be about £60,000. Divided between 280 passengers, this is an intimidating £215 per passenger - each way! - obviously substantially more than Air Passenger Duty, and arguably a price that would seriously inhibit longhaul airline travel.
As Simon Calder points out in his column here, in talking to bmi CEO Nigel Turner, the increase in APD will have no impact on the environment. My suggestion for making aviation more environmentally friendly? Make APD payable per seat. There would then be an incentive for airlines to make sure that their aircraft were as full as possible. Heavier aircraft burn more fuel - but not in proportion to the additional number of passengers carried. And don't penalise them for cancelling a flight if there aren't many passengers on it.
