Aviation leaders say Budget tax rises could threaten flights demand

Aviation leaders have warned a fresh hike in air passenger duty (APD) on top of other tax rises expected in the Budget on November 26 would increase fares and threaten demand for flights.

British Airways chief Sean Doyle told the Airlines 2025 conference in London last week: “Anything that increases costs isn’t good [and] any cost will feed through to fares.”

Tui Airline chief executive Marco Ciomperlik described APD as “so significant”, saying: “Premium economy has the same rate as business class. We urge the government to be reasonable with APD.”

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Nick Faith, chief executive of consultancy WPI Strategy, told the conference: “This matters a great deal politically. A family of four travelling to Cancun could have to pay £1,000 more by 2029. Going abroad on holiday could be out of reach for many families, and MPs will have to explain to families why they can no longer afford their one holiday abroad a year.”

Iata senior economist Maja Marciniak described APD rates as “excessive” and argued: “Ticket taxes are a factor when airlines make decisions on which routes to grow. The UK has the highest [tax] in Europe. Spain has no aviation tax at all. The UK is no longer as attractive as it could be.”

Transport secretary Heidi Alexander told the conference: “I’ve not got my fingers in my ears when CEOs talk to me about UK competitiveness [and] reducing your cost burden.” But she made no mention of APD or the Budget.

The economy rate of APD on short-haul international flights did not rise this year but is already set to increase by £2 to £15 from next April – the first increase in 14 years. The premium short-haul rate will rise by £4 to £32. Long-haul rates rose £2 in economy to £90 or £94 this year depending on the distance and by £22 in premium, with increases of £12 in economy and £28 or £29 in premium to come next year. That will take APD on premium seats to £244 on flights of up to 5,500 miles and £253 on longer flights.

APD raised £4.2 billion for the Treasury in 2024-25 and is forecast to raise £4.7 billion in the year to April.