The Government has signalled its partial acceptance of industry criticism of Air Passenger Duty by proposing changes to the rating system.
It issued a consultation document this week on options to change the way APD is levied, but the move sparked fury at business-only carrier Silverjet.
The current system, following the doubling of APD in February, levies £80 in duty on long-haul premium economy fares, but only £40 on business-class only flights.
The consultation assumes two APD rates will remain and proposes three options for changing how these apply: the rates could be based on seat pitch or on a combination of seat pitch and services, or the definition of business-only flights could be amended.
This last option would double APD levied on business-only carriers, leaving the rate on premium economy fares unchanged. The first two would see the premium economy levy halved.
The Treasury will only consider proposals that maintain the £2 billion a year it collects from APD.
Silverjet chief executive Lawrence Hunt said: “Why should we pay another £40? Since we set up this business, all the Government has done is raise tax and the only reason is to plug holes in its finances.”
The consultation will not affect the Federation of Tour Operators’ High Court case against the Government’s doubling of APD, which is scheduled for July.
FTO director-general Andy Cooper said: “We’re pleased the Government has come up with something, but this fails to address the more pressing issue for operators.”
The FTO hopes for a refund of the £50 million it cost the sector to pay the increased APD on advanced bookings. The industry has until July 31 to respond to the consultation.
- Read the consultation document on Hmrc.gov.uk