The government appears ready to dash industry hopes of an end to Air Passenger Duty on fares, with an increase in APD on the cards in an imminent Pre-Budget Report.
Chancellor Alistair Darling promised to abolish APD and replace it with a new aviation duty in his Pre-Budget Report a year ago. The duty was to be related to the environmental impact of flying and replace APD from November 2009.
Darling promised details of the proposals by this autumn and an announcement of the switch a full year before its introduction. All parties expected this to be included in the chancellor’s next Pre-Budget Report, due by early December.
However, since initial proposals went out to consultation early this year the Treasury has said nothing.
A Treasury spokeswoman refused to comment beyond saying: “We cannot confirm the date of the Pre-Budget Report. One is expected before Christmas. You just have to wait.”
ABTA met Treasury officials last week, but drew a blank. An ABTA spokeswoman said: “We are concerned the government will increase APD as a stopgap.”
The Treasury has banked on the new duty bringing £500,000 more in revenue than the £2 billion a year from APD – suggesting a failure to make the switch could mean at least a 25% rise in the duty. However, the government will need to raise more tax following recent events.
Tour operators were enraged when the government gave less than two months’ notice that it was doubling APD two years ago – costing the trade £50 million. The Federation of Tour Operators and ABTA have lobbied against any repeat and easyJet has campaigned for aviation duty.
However, British Airways and other scheduled airlines have lobbied to retain APD.
A senior industry source said: “We are bemused by the situation. An announcement is needed this month if the government is to stick to its promise.”