LOOP News

1 JAN 07: FUEL FIASCO

End of duty exemption threatens huge price rise for aviation

PILOTS will have to pay more for Avgas and Jet A1 in the New Year because the EU says current tax exemptions on the fuels can no longer stay in place.

It seems that even though avgas is already expensive at £1.30 a litre (compared to motor fuel at £0.87 a litre), we have been enjoying a lower rate of duty that was never intended to remain in place permanently.
The EU Commission's decision means the UK's right to levy a lower rate of duty ends on 1 January 2007. After that, all EU member states should apply a minimum excise duty on aviation fuel for private pleasure flying. Such minimum excise duties already apply in 15 of the 25 member states.

However, prices are unlikely to rise immediately as the UK Treasury Minister, John Healey, has made it clear to the EU the UK will need a 'transitional' period to implement the changes required.

Mark Wilson of the British Business and General Aviation Association (BBGA) told LOOP, "We worked with the Treasury over the summer to prepare the UK's position on this. It all seemed positive until two weeks ago [beginning of December]. The EU Commissioners have obviously decided to make a stand on this."

Both the BBGA and the Aircraft Owners and Pilots Association (AOPA) are lobbying the Treasury to maintain the UK's position and not to just accept the tax rise "and blame it on Europe".

AVGAS
NOW: £1.30 per litre (duty: 28.1p per litre, VAT 17.5%)
2007:
BEST CASE £1.32 per litre (duty: 30p per litre)
WORST CASE £1.86 per litre (duty: 56.2p per litre, same as car petrol)

JET A1
NOW: £0.54 per litre (duty: nil, VAT 17.5%)

2007:
BEST CASE: £0.54 per litre (duty: nil)
WORST CASE: £1.20 per litre (duty: 56p per litre, as Germany)

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LOOP News

1 JAN 07: FUEL FIASCO