Britain to Replace Air Tax (Folo) Litalia Expects Deal on Stake Sale Soon

Alistair Darling, the chancellor of the British Exchequer, plans to levy a tax on flights to replace a passenger charge in a move that may benefit discount airlines, Bloomberg News reported Tuesday from London.

“From 2009, I intend to levy the duty not on individual passengers but on flights, to encourage more efficient use of planes,” Darling told the House of Commons on Tuesday. Aviation, he said, should make “a greater contribution in respect of its environmental impact.”

Gordon Brown, the previous chancellor and now prime minister, had doubled the air passenger duty, or APD, on short-haul flights to 10, or $20, per passenger in February in an effort to reduce pollution from aviation. The move provoked criticism from discount airlines like Ryanair and easyJet that said the charge penalized budget carriers, which tend to fill as many seats as possible on their planes.

“The low-cost airlines operate with very high load factors,” said Stephen Furlong, an analyst at Davy Stockbrokers. “It depends on the details of Darling’s proposal, but that’s definitely going to be a positive for them.”

Originally published by Bloomberg News.

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