There were high hopes chancellor George Osborne would scrap APD for children under 12 in his Autumn Statement on Wednesday.
Industry coalition A Fair Tax on Flying launched a campaign to abolish APD on children’s fares only last week, but the reaction was likely to be angry if Osborne failed to act, given strong rumours that the Treasury would concede on the issue.
Any cut could come into force next April when the current four APD rates go down to two – reducing APD on fares to the Caribbean and other long-haul destinations to the same rate as to the US. The chancellor revealed that change in March.
A Fair Tax on Flying pointed out that cutting APD on the fares of under-12s would halve the cost of APD for a family of four while costing the Treasury just £52 million a year.
Further change is on the cards after the Smith Commission on Scottish devolution proposed that the Scottish Parliament has the power to axe APD. The commission was set up immediately after the Scottish independence referendum in September and its proposals, issued last week, agreed by the main political parties.
The industry reacted sharply. Willie Walsh, head of British Airways’ parent International Airlines Group, warned: “Removing APD in Scotland would see passengers rushing across the border to avoid paying the tax. APD must be axed across the UK.”
Abta chief executive Mark Tanzer said: “Any inconsistencies between what a passenger pays would create a damaging situation for travel businesses.”
The government will publish the draft constitutional changes by January 25, but the timetable for devolution is unclear – meaning there is no firm date for abolition in Scotland.