Plans to extend Birmingham International’s runway and provide a direct link with India have been put at risk by Gordon Brown’s changes to air tax, it has been claimed.
The aviation duty changes put the future prosperity of the region at risk by casting doubt on plans for a 400 metre runway extension, airport managers claimed.
They issued the warning after meeting Liam Byrne, the Minister for the West Midlands, to back a major new strategy to improve economic links between the West Midlands and India.
The number of Indian companies investing in the West Midlands has more than doubled in just two years, and more than 1,500 jobs have been created since 2006 by 16 companies.
There are now over 30 Indian-owned businesses in the region, including State Bank of India, ICICI Bank, Tata Steel, Mahindra & Mahindra and Aditya Birla. And, following its acquisition of Jaguar Land Rover, Tata Motors is now the single largest foreign investor in the West Midlands.
But the scope for economic co-operation is expected to grow substantially as India overtakes the United Kingdom and eventually the United States to become the world’s second-largest economy, after China.
Mr Byrne and Advantage West Midlands, the regional development agency, launched proposals to help businesses in the region make the most of opportunities to trade with India.
Birmingham International Airport is planning an ambitious 400-metre extension to the southern end of the runway, allowing it to cater for long-haul flights including direct flights to India.
This would put the West Midlands on a level playing field with other UK regions seeking lucrative partnerships with India, the airport claims.
But it may become too expensive to begin operating new flights because of Government plans to replace existing air taxes, which are charged per passenger, with a new levy, charging a fixed amount per plane, according to the airport.
The new tax system is designed to penalise airlines which fly half-empty planes, causing more pollution per passenger than a flight which is fully-booked.
But Birmingham International points out that new routes always take some time to build up passenger numbers, which means that planes may fly with empty seats at first.
The Government’s proposals mean that these would be more expensive to run - and may not be economically viable. The tax reforms have put “further stress” on plans for a runway extension, the airport said in a statement.
John Morris, Birmingham International Airport’s Head of Corporate Affairs, said: “Adding around 400 metres to our runway will dramatically increase the capability of Birmingham International Airport and the economic fortunes of the region - by providing the opportunity for direct flights to the whole of India as well as other long-haul destinations”.
He added: “The Government should be aware of the impacts of the so-called Aviation Duty. The Airport Company’s financial case will become even more challenging, and regional jobs could be jeopardised.
“The message to Government is, let’s have some clarity, and don’t let India stay out of reach.”