The head of Tui Travel, the UK’s biggest travel group, has said a freeze in Air Passenger Duty (APD) allied to changes in banding and to the tax on premium economy seats “would be a result” in Wednesday’s Budget.
Tui Travel chief executive Peter Long told Travel Weekly at the recent ITB trade show in Berlin: “I would be happy with no overall increase in APD, the removal of premium economy [from the same rate as business class] and getting the banding right. That would be a result.”
Chancellor George Osborne is expected to announce a freeze in APD rates in Wednesday’s Budget statement after the Treasury confirmed it had planned to raise duty in line with inflation from November.
Osborne said at the weekend he would not “ask for more” from holidaymakers, ruling out an increase that would have added another £150 million in APD receipts. The freeze marks a victory for the first phase of an industry campaign calling for A Fair Tax on Flying. But it remains unclear whether other demands will be met.
Long said: “I hope we can persuade the government that a bit of extra leg room [in premium economy] can be taken out of the APD rate of business class. If not we will probably take premium economy out of our aircraft. I also hope we can get the banding right because of the damage to the Caribbean.”
Flights to the Caribbean are taxed at a higher rate than to neighbouring Florida and by more than to California and Hawaii. However, Long appears more relaxed about the impact of APD on demand than many of his colleagues in the industry.
He told Travel Weekly: “The country needs to balance the books. We will continue to lobby, but we need a degree of pragmatism. Tax has to be focussed on those who can afford it. We have to get ourselves out of this mess and a strong economy has to be the goal. We can get angry about it, but we have to be sanguine. We are where we are.”