The Chancellor’s decision to abolish Air Passenger Duty (APD) for children has been welcomed across the industry. But many in the sector have demanded the government go further.
George Osborne announced the abolition of APD for children under-12 from next May in his Autumn Statement yesterday, amid rumours that a concession to industry demands was in the offing.
But he went further than expected with a pledge to abolish APD for under-16s from May 2016 The industry coalition A Fair Tax on Flying launched a campaign to demand the scrapping of APD on under-12s only last week.
Abta immediately welcomed the move. Chief executive Mark Tanzer said: “ABTA is delighted with the announcement that APD will be scrapped on economy flights for children – a clear indication that this government has listened to the case made by the A Fair Tax on Flying campaign.
“This is a hugely positive step for UK families. However, UK businesses and consumers endure paying one of the highest flight taxes in the world.
“Abta will continue to make the case that the positive momentum from the Treasury on APD must continue, starting with a much needed review of the tax more widely.”
The Chancellor’s move will halve the APD on the holiday air fares of a family of four while costing the government just £40 million a year in the first year, according to Treasury estimates.
In his Autumn Statement, Osborne also pledged to make airlines list all taxes and charges on tickets.
The Chancellor told Parliament: “Just as we demand that falls in oil prices should be passed on to people at the pumps, other fuel price surcharges should also come down.
“We’re going to require airlines to list the [fuel price] charges separately from taxes on tickets.”
Details on this requirement have yet to be released.
The APD cut will come into force next May a month after 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 announced that change in March.
Further change is on the cards after the Smith Commission on Scottish Devolution proposed last week that the Scottish Parliament have the power to axe APD.
In other moves, the Chancellor announced a review of business rates which is expected to help High Street shops.
The Chancellor’s statement did not please everybody. The British Hospitality Association (BHA) said: “The real issue is that the government’s help is urgently needed by struggling coastal and rural regions of our country.
“The Chancellor has missed an important opportunity to help thousands of small and medium sized hospitality enterprises, upon which so many coastal and rural communities depend for their jobs and livelihoods.”
However, UKinbound chief executive Deirdre Wells expressed delight at the abolition, saying the Fair Tax on Flying campaign should be congratulated.
Wells said: “Inbound tourism has lost out in recent years to European competitors so this is a huge step in ensuring the UK remains as competitive as possible.
“This will certainly boost the industry’s chances of achieving the ambitious goal of welcoming 40 million visitors to the UK by 2020.”
“The changes confirm tourism is high on the government’s agenda. We now eagerly wait to see what the party manifestos outline for tourism ahead of next year’s General Election.”