Business reporter Alistair Houghton looks at the airline industry's debate over Air Passenger Duty

Mr Pakey says that as APD makes flights from the UK more expensive, then airlines can be put off establishing more routes to UK airports as they fear they may not attract sufficient passenger numbers.

He says that when APD doubled last year northern airports lost routes. He said APD was cited by VLM, which flew from Liverpool to London, and FlyGlobespan, which flew from the city to New York, as part of the reason they chose to close those services.

BA recently announced it was to end its direct flights from Manchester to New York, and Mr Pakey said APD played a part in that decision.

He said: “What we say to the Government is ‘have a full economic consideration of the impact of aviation before any future increases in taxation.’

“This is a tax that’s unique to the UK. When we’re trying to compete for long-haul services to Liverpool this is something our European neighbours don’t have to contend with.

“We feel the North is more price-sensitive than the South East. As a result, when an airline looks at its margins, routes in the North are more vulnerable.

“In the North of England we are a more price-sensitive market. People are perhaps not as affluent as southern travellers.

“Airlines are commercial operators. They’ll fly to where they can generate more profits. The UK is making that increasingly hard for them.

“There’s some well-reported figures on the strong economic impact that aviation has in terms of jobs, wealth, inward investment and tourism.

“But has the Treasury really considered the impact on this of taxation?