The Federation of Tour Operators has lost its appeal for £50 million in compensation for the rushed introduction of a doubling in air passenger duty at the beginning of last year.

In a ruling issued this morning the Court of Appeal dismissed the FTO’s appeal against a High Court judgment last year.

The High Court had dismissed an FTO challenge to the legality of APD, but acknowledged tour operators had been penalised by the short time between the announcement of the rate increase in December 2006 and its introduction in February 2007.

This forced tour operators to pay the increased APD for passengers who had booked holidays in advance, while airlines were able to surcharge passengers for the additional tax. The total bill was put at £50 million.

The FTO expressed disappointment at the decision and said it was reviewing its options.

In a statement, the FTO said: “The wider business community will note with concern that the Court established the increase was in practice a retrospective tax and that a key driver for the government’s action was simply to raise revenue.”

The FTO became part of travel association ABTA on July 1, but will retain its own name and organisation.