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US government takes UK to task over proposed aviation duty, claiming it contravenes Chicago Convention

US government takes UK to task over proposed aviation duty, claiming it contravenes Chicago Convention | American Embassy, Treasury, John Byerly, Aviation Duty, ICAO, Dutch eco tax, US Embassy

US State Department
Fri 16 May 2008 – In a diplomatic note to the UK government, the US has attacked a UK Treasury proposal to change the present Air Passenger Duty (APD) to a per-plane aviation duty, says an article in The Sunday Times. A senior US aviation negotiator is said to have met with Treasury officials last week to “press home the argument” that the duty breaches both the Chicago Convention and the recent US-EU Open Skies agreement.
 
The note was sent by the US Embassy in London to the Foreign Office last month, reports the newspaper, and said the proposed duty, due to come into force at the end of next year, “raises significant policy and legal issues”. It asked whether it could be justified when the UK government is planning an expansion of London’s Heathrow airport since the duty would appear to have the effect of wanting a reduction in the number of flights from Britain.
 
The switch from APD to the aircraft-based Aviation Duty was justified by the UK government on environmental grounds, which the Americans claim is “far-fetched”, adding that in reality it constituted nothing more than a device for generating additional revenue from airlines. The amount raised by APD, first introduced in 1994, in the 2007-8 fiscal year is forecast at around £2 billion ($3.95bn) and the new scheme is expected to raise a further £520 million ($1bn).
 
A government public consultation on the proposed switch closed on April 24. The Board of Airline Representatives in the UK (BAR UK) has already called on the Treasury to rescind the tax entirely (see story).
 
The US negotiator who met with the Treasury is said to be John Byerly, the State Department’s Deputy Assistant Secretary for Transportation Affairs, who has also been involved with other aviation-related negotiations with the European Commission, including the Open Skies treaty, which recently came into force, opening up competition on transatlantic routes.
 
An embassy official confirmed the accuracy of the Sunday Times report to GreenAir. He said UK government officials had been “receptive and respectful” to the legal arguments put forward by Byerly. No comment was forthcoming from the UK Treasury.
 
The official also confirmed the US government is similarly concerned with the airline passenger ‘eco tax’ due to be imposed in the Netherlands from July. The tax was recently challenged in the Dutch courts by airline representatives on the grounds that it too contravened the Chicago Convention. The airlines lost the case but an appeal is due to be heard on July 3.
 
Last month, an official in the European Commission’s Transport Directorate said any passenger or aircraft environmental tax imposed by EU States should be repealed once aviation is included in the EU Emissions Trading Scheme (see story). The Scheme is another contentious aviation issue in transatlantic relations as it will include US and other foreign airlines with or without their consent.
 
The view of the US is that these issues must be agreed within the International Civil Aviation Organization (ICAO) framework. Speaking this week to the European Aviation Club in Brussels, Byerly said: “We believe that the active discussions currently underway in ICAO are the right place to tackle the important question of greenhouse gas emissions. This is a global issue in a global industry that calls for a global solution.
 
“We do not rule out the possibility that environmental constraints on the exercise of traffic freedoms may figure in the US-EU Air Transport Agreement second stage negotiations. While we plan no proposals at the opening round in Slovenia, the United States believes any eventual discussions should be consistent with ICAO principles and centre on performance, not the adoption, of a particular measure.”
 
Negotiations on the second stage of US-EU Air Transport Agreement opened yesterday, May 15.
 
 
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