Tui Travel will fly the Boeing 787 Dreamliner with a single cabin if the government refuses to cut the rate of air passenger duty (APD) on premium economy seats.
Group chief executive Peter Long said: “We will vigorously campaign for tax to be on a fairer basis, but we will not run two cabins [on the 787] if we are not listened to.”
Premium economy seats are taxed at double the rate of economy class for APD – the same as business and first class on carriers such as British Airways.
Speaking at the Farnborough Air Show, which welcomed the Boeing 787 on its first flight to the UK yesterday, Long said:
“Hard-working customers taking an annual holiday should not be penalised and we should not be subsidising freight transportation. Premium economy is not business class.”
The government has promised to look at changing APD, which does not apply to cargo flights or business jets. However, business groups and scheduled carriers such as BA would prefer it was retained rather than replaced with a duty on aircraft.
Tui charter carrier Thomson Airways will be the first UK airline to take delivery of the 787 in January 2012. The aircraft is due to enter service early next year with Japanese carrier All Nippon Airways.
The company must decide by this autumn whether to install premium economy on its Dreamliners. Long said: “We are lobbying now and it’s early days with the new government, but we are clear what we’ll do if we don’t get the right outcome.”
Long pointed out that from November passengers will pay £150 in APD on premium economy seats to the Caribbean – when the tax on a business class fare to Los Angeles will be £120.