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

“I get the impression they’ve just looked at it as a bit of a cash cow to be tapped into.”

Mr Pakey said he agreed with Easyjet that “environmental” taxes should be linked with the environmental impact of flights – but said he wanted clearer evidence that APD was being used to improve public transport or address climate change.

He said: “The indications are that one of the main motivations (for the planned change in APD) is to increase revenues from the industry to the Treasury. The industry can ill afford an increase of some £500m, which is what’s being talked about as the target increase.”

The Government’s proposal has also been fiercely criticised by US officials.

A letter from the US Embassy in London to the Treasury, obtained by the Daily Telegraph, said: “There is no linkage between the funds collected from airlines and the mitigation of any environmental impact of airline emissions or any other environmental problem... Moreover, the Treasury’s proposal does not demonstrate that the new duty would influence airlines to adjust their fleets or their booking practices to achieve higher load factors.

“Nor are any data provided to justify the levy based on an assessment of damage from aircraft emissions.”

Ryanair and Michael O’Leary have always been opposed to any taxes levied on environmental grounds. It says taxing air transport does not help reduce greenhouse gas emissions but can harm economic growth by discouraging people from travelling.

The company says that if environmental taxes are imposed then they should be applied at a uniform level on all flights to and from any EU airport and should penalise “inefficient traditional airlines operating with low load factors and older, more polluting aircraft.”

With pressure from groups such as Friends of the Earth on one side and from the airline industry on the other, the Government faces a tough decision on APD. Neil Pakey and his industry colleagues will be watching very closely.

alistairhoughton@dailypost.co.uk