Britain hooked on high taxes as aviation industry warns of economic dangers and green tax myths

Britain is increasingly reliant on high taxation to bolster public finances amid lacklustre economic growth, according to the head of the International Air Transport Association. Willie Walsh, director general of IATA and former British Airways chief executive, criticised the government for ongoing rises in Air Passenger Duty, which are passed onto consumers via higher ticket prices.

Walsh argued that these increases are being justified under the guise of climate action, despite lacking any genuine environmental impact. He stated taxation does not cut carbon emissions but simply reduces the affordability of air travel, leaving flight schedules unchanged. The result, he contends, is that there is no material benefit for the environment.

Air Passenger Duty is scheduled to reach record highs in April following an uplift in last year’s Budget, with further inflation-linked hikes set to take effect from 2027. Walsh suggested that persistent reliance on such taxes reflects fiscal desperation rather than sound financial strategy, attributing this to the UK economy’s continued stagnation.

Walsh warned that elevated taxes could prompt travellers to bypass major UK hubs like Heathrow in favour of airports abroad, eroding the viability of domestic routes. He cited the Netherlands, where similar measures led passengers to seek out alternative airports in neighbouring countries, harming the national aviation sector.

On sustainability policy, Walsh predicted that Britain may abandon its legal mandate for a ten per cent blend of sustainable aviation fuel by 2030, as supply remains far below target. He pointed to industry forecasts that an attainable figure could be as low as two and a half per cent by 2026, with several airlines now revising their own commitments. The EU’s target of six per cent sustainable aviation fuel by decade’s end is also described as increasingly challenging.

The IATA director general criticised the broader regulatory approach, highlighting issues of price gouging by fuel suppliers and claiming that statutory mandates have not meaningfully increased sustainable fuel production. Walsh also raised concerns about Heathrow expansion, cautioning that soaring construction costs could threaten the airport’s competitiveness and lead to unused capacity.

He also took aim at jet engine manufacturers, charging them with maintaining high profit margins while delivering subpar products that are prone to performance issues and frequent breakdowns. The outlook for the industry, Walsh concluded, remains difficult as regulatory and fiscal burdens constrain growth and competition.