In 2019 the UK government increased the tax paid on flights out of the UK (specifically Heathrow airport) to approximately $300 per ticket. This tax is collected from airline companies who use Heathrow Airport for their operations. Source: Graham, Matt (2018). See link: https://www.australianfrequentflyer.com.au/australian-departure-tax/
Consider the market for airline travel. The initial
Show the effect of this on the market for airline travel. Show the effect on consumers of airline travel, on the airlines and on the government. Does the UK economy gain or lose as a result of the tax? Explain why. Use a diagram to support your answer.
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