Government proposals to increase taxes on short flights and reduce them on long ones will lead to longer flights and more pollution, says easyJet.

A report commissioned by the budget airline says the proposed changes will:

• Reduce UK passenger numbers by 3 million a year
• Increase CO2 emissions by up to 360,000 tonnes per year
• Reduce tourist spending in the UK by £475m a year
• Reduce UK GDP by £2.6 billion per year
• Lead to the loss of up to 77,000 jobs

The government proposes to increase Air Passenger Duty (APD) from £12 to £16 per person on flights up to 2,000 miles, but reduce the rates and number of tax bands on long haul flights. Some environmentalists, as well as easyJet, favour a fixed tax on flights rather than passengers, so that the fuller the plane, the lower the tax per passenger.

“This independent report shows that the Government’s proposals on APD would be bad for the environment and the economy,” said easyJet CEO Carolyn McCall. “APD has already risen by 14 per cent since 2007 on short haul flights. This report provides convincing evidence that the Government should not impose further increases in APD on short haul flights and should rethink its policy on aviation taxation.”

Virgin Atlantic also weighed in to the debate, saying: “We share concerns about the impact of further increases on APD on family holidays, British business, and tourism alike. In Britain we already have the highest flight tax in Europe, with a family of four travelling to Florida paying £240 in APD alone.”

However, Virgin predictably supported shifting taxes from long flights onto short ones: “Currently passengers within the EU account for 78 per cent of all flights, but just 41 per cent of APD revenues, and we hope that the Government will look to address this in its current review.”

Ryanair and easyJet, the big two no-frills airlines, have become increasingly dominant in the UK low-cost flights market, with many smaller players either cutting back or squeezed out entirely. That has led to fears that reduced competition could eventually lead to much higher fares.

So it’s good to hear that Bmibaby, now owned by Lufthansa, has announced seven new holiday destinations as part of its summer 2012 schedule. The additional routes are from Birmingham to Barcelona, Lisbon and Rome (Fiumicino), and from East Midlands to Corfu, Gibraltar, Murcia and Naples.

Bmibaby is increasingly focusing on the Midlands, with the new routes bringing the airline’s tally of destinations served to 31 from East Midlands and 14 from Birmingham. The new flights will start in April 2012.

A similar strategy of regional specialisation has seen healthy growth from Jet2, which concentraties on the North of England. Exeter-based Flybe, on the other hand, has carved out a different niche by using its fleet of smaller planes to serve routes between regional airports with insufficient traffic to fill the larger jets used by the big two.

EasyJet’s winter schedule, running from 31 October through to March 2011, is its biggest ever, offering more than 11.5 million seats across 230 low fare routes.

The no-frills airline has more than 80 new routes this winter, with a host of sun destinations including Cyprus, the Canary Islands, Egypt, Morocco, Tel Aviv and Turkey.

In 15 years, British company easyJet has created one of Europe’s key transport networks, operating on 45 of Europe’s top 100 routes, with 19 bases across 28 countries, and a fleet of 182 aircraft. This year it will have carried 50 million passengers on over 500 routes between 119 airports in 29 countries. It’s the UK’s largest and Europe’s fourth largest airline by passenger numbers. In 2009, the airline carried 28 million passengers in the UK and 46 million in total.

BMI Baby flight from Manchester to Malaga. Photo by Terry Wha

The drastic downsizing of low cost airline bmibaby shows the fierce competition smaller operators are facing from the big two of the no-frills airline world, Ryanair and Easyjet.

The bmibaby fleet will be cut from 17 to 12 planes, leading to the likely loss of around 160 pilots and cabin crew based at Birmingham, Cardiff and Manchester. Management and support staff jobs are also at risk.

Bmibaby has blamed the recession for its problems, but it looks as if new owner Lufthansa has decided bmibaby cannot compete head on with the big two, who have been muscling in on previously profitable holiday routes like Alicante and Málaga. Instead, it will focus on less competitive routes with growth potential.

The move is the latest step in a long process of consolidation amongst budget airlines. Players that have fallen by the wayside include early front runners Go (set up by BA and later sold to Easyjet) and KLM subsidiary Buzz (sold to Ryanair). MyTravelLite stopped independent operations in 2005 and Thomsonfly has effectively given up scheduled flights. The two remaining significant UK-based operators are Flybe and Jet2. Both have tried to develop as regional airlines avoiding direct competition, but that strategy is likely to come under increasing pressure as the big two add ever more routes. Monarch also offers scheduled services on some holiday routes.

Charter airlines are also suffering, as flight-only passengers increasingly prefer the lower costs and greater flexibility of budget airlines. In October, the number of charter airline passengers passing through BAA’s seven UK airports fell by 12.4 per cent compared with a year earlier (scheduled traffic rose by 1.1 per cent), while Manchester airport saw a 12.7 per cent fall in charter passengers.