Frequent Flyer Airmiles Schemes

Lord Duncan of Springbank Excerpts

Monday 21st October 2019 Lords Chamber

[Baroness Jones of Moulsecoomb]

To ask Her Majesty’s Government what plans they have to (1) ban or (2) restrict frequent flyer “airmiles” schemes.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

My Lords, the fight against climate change is the greatest and most pressing challenge facing the modern world. The UK has done more than any other major economy to tackle emissions. UK airlines operate as commercial undertakings in the private sector; the Government do not intervene in commercial matters such as customer loyalty schemes.

[Baroness Jones of Moulsecoomb (GP)]

I thank the Minister for his Answer. However, given that, as he says, climate change is the greatest and most challenging issue, surely it would be sensible to encourage airlines so that, instead of rewarding the 15% of the population who take 70% of the flights, it would be better for all the rest of us if they did not run these schemes—and if they did, we should have a frequent flyer tax instead.

[Lord Duncan of Springbank]

I would much rather that we were able to address 100% of the individuals who take flights. That is why we are participating very strongly in the International Civil Aviation Organization—ICAO—to try to make sure that it addresses this matter at an international level. There are means which can be taken; the next meeting will take place in 2022, and the Government stand ready to play their part.

[Lord Teverson (LD)]

My Lords, the Minister will understand that that is an international offsetting mechanism, which will not work. As individual car drivers we pay 58p per litre in fuel duty, and on top of that we pay VAT. The airlines pay absolutely zero tax on aviation fuel. Surely that is wrong. Would it not be an excellent way to address this, when we chair COP 26 in Glasgow next year, to have as one of our objectives that all airlines internationally should pay their fair tax and their fair contribution to remedying environmental damage?

[Lord Duncan of Springbank]

To be very clear, the UK has an air passenger duty which raises £3.6 billion a year. It is the highest such tax in Europe—many countries in Europe do not have such a tax—and that money goes a long way to address climate change issues, which are of importance to the Government.

[Lord Hamilton of Epsom (Con)]

My Lords, surely a customer loyalty scheme is what it says on the tin: it is trying to persuade people to fly with one airline rather than another. There is no evidence that if you discriminate against these schemes, people will fly less; they will just choose between one airline and another.

[Lord Duncan of Springbank]

It is not the policy of the Government to intervene in these commercial decisions. It is also important to recognise that this is a regressive step in many respects.

[Lord Brooke of Alverthorpe (Lab)]

Is it not the Government’s responsibility to ensure that anybody going on a flight should know what damage is being done to the environment as a consequence of that flight? Is it not time that each individual should have on their ticket or in the email sent to them the amount of carbon that they will be using on that flight? Is it not right that we should have an international scheme whereby the more that people fly, which is recorded on their carbon footprint, the greater the contribution they should make towards the cost of the flight and towards putting the environment right by a tax that increases with more flying?

[Lord Duncan of Springbank]

To be very clear, our air passenger duty is a tax commonly passed on to passengers: the more you fly, the more you pay. Additionally, this should be addressed at international level, as the noble Lord said. I am not averse to the notion of people being more fully aware of what they are participating in, and I will examine that more carefully.

[The Lord Bishop of Salisbury]

Can the Minister explain why the gap between aviation fuel being untaxed and road fuel being taxed as it is, is so great? If the answer is the difficulty of getting international agreement, why are UK internal flights not taxed to get some parity between different methods of transport?

[Lord Duncan of Springbank]

The challenge we face in this country is that we are a major hub for international flights, as well as a country with a significant geographical challenge. We do all we can to ensure that people can take the types of journey they are able to take; it is up to commercial companies to determine how best to take that forward.

[Lord Tugendhat (Con)]

My Lords, might the Minister consider a more rifle-shot approach and, instead of thinking about commercial airlines, think about private jets? Might it be an idea to levy a tax on fuel sold to private jet companies, as distinct from the wider question of national and budget airlines? Private jets might be the best place to start.

[Lord Duncan of Springbank]

My noble friend raises a question to which I do not have the answer in my notes. It strikes me that private jets probably constitute a very small proportion of the overall flights in this country, and that private jets may choose not to come here, depending on circumstance.

[Baroness Randerson (LD)]

My Lords, does the Minister accept that there is great public concern, with the increased awareness of the damage of flying to our environment and climate? Does he accept that it is time that the Government took some action and worked with the grain of public opinion? Will he agree to talk to his colleagues and examine the simple carbon tax introduced by the French Government this year? It will come into force next year, it will tax every flight and it will start to address the damage that is being done.

[Lord Duncan of Springbank]

The noble Baroness makes a point, but air passenger duty is already a tax on every flight which is directly passed on to air passengers. It is also important to recognise that there is a responsibility on individuals. You do not have to fly abroad to take a holiday: St Andrews, in Scotland, is very pleasant, as are many other places in the United Kingdom.

[Lord Bates (Con)]

My Lords, might not a positive way to address the issue be to extend the benefits of loyalty schemes to those who use public transport, cycle or walk?

[Lord Duncan of Springbank]

Yes, that is probably true. I am not sure how it would work, but I am willing to go away, look at it and see whether we can do something with it.

[Lord Fox (LD)]

My Lords, the Minister just dubbed this measure regressive in many ways. Could he enlighten your Lordships’ House on how it is regressive, given the climate emergency that we face?

[Lord Duncan of Springbank]

The reason why I suggest that it is regressive is that by taking this approach, whether banning air miles or making other restrictions in this fashion, the people affected will almost certainly be the poorest, not those who are wealthy or who are travelling business class. The problem is that they can continue to afford to do so, while those who take family holidays will be hit by the brunt of the tax. That is regressive.

[Baroness Jones of Moulsecoomb]

My Lords, I am sorry, but that is absolute nonsense. It is not true. The 15% are the wealthiest people, not the poorest people who take only one flight a year.

[Lord Duncan of Springbank]

I have a sneaking suspicion that the 15% who are the wealthiest will not be deterred by the removal of a loyalty scheme.