Abta and airlines vowed to fight on over Air Passenger Duty (APD) after the government ruled out any changes to the tax.
The four APD band rates will remain, with an 8%-9% rise from next April penalising destinations, especially the Caribbean.
Premium economy will remain taxed at the same rate as business class, and APD will not be offset against the costs of the European Emissions Trading Scheme, which airlines will join in January.
The Treasury rejected all industry arguments, leading the heads of the UK’s biggest airlines to dismiss a consultation this year as a “sham”. In a joint statement, Willie Walsh (of British Airways parent IAG), Carolyn McCall (easyJet), Michael O’Leary (Ryanair) and Steve Ridgway (Virgin Atlantic) said: “We are left with a tax doing increasing damage to prospects of economic recovery.” They called again for an independent study of APD’s impact.
Abta chief executive Mark Tanzer said: “The government has rejected all commonsense recommendations.”
However, Abta’s head of public affairs, Luke Pollard, insisted: “This issue has not been put to bed; it remains live for the industry, for passengers and for destinations. The government has heeded none of the advice. It is very disappointing, but it has not made any of the arguments less valid. It will galvanise the industry to do more.”
The Treasury rejected calls for a reduced premium-economy rate “to maintain the simplicity of the tax”. And it justified retaining four bands by saying: “No banding structure will be free of anomalies.”
From next April, APD on economy flights will be £13 on short-haul, rising to £92 for long-haul. APD on premium economy and business-class fares will remain double, a decision Virgin Holidays managing director Amanda Wills described as “a kick in the teeth”.
Minister Ricky Skerritt, Chairman of the Caribbean Tourism Organisation, said: “Today’s announcement on the APD is a slap in the face for all Caribbean people.
“It dismisses all of the research and information CTO has provided to the British government over the past three years, and it contradicts the message sent by the UK Chancellor, George Osborne MP, in March 2011 when he cited the discrepancy between the US and Caribbean APD rates as one of the reasons for holding a consultation on reform of UK APD.
“The Caribbean is the most tourism-dependent region of the world and the British Government’s decision totally ignores the negative effect that APD is having on our economies and the Caribbean’s business partners in the UK travel industry.”