Government must recognise the barriers facing travel

An increasingly prominent theme in Abta’s lobbying work is the growing regulatory and tax burdens on UK travel businesses and their customers.

 

Especially set against an extremely challenging geopolitical backdrop, which brings its own cost of living and price pressures. It’s never been more important that policymakers are aware of the challenges travel businesses and their customers face, and we continue to stress this to government.

 

This April will see several developments across policy, regulation, and taxation, which illustrate the need for vigilance from government to ensure the success that travel has enjoyed post-pandemic is maintained and the industry can support economic growth.

 

Air Passenger Duty (APD) increases to £16 for short haul economy flights from April 1. This was announced in the 2024 Budget, when the Chancellor announced all APD rates would be uprated by 13% to address real terms cuts over previous years.

 

Of course, these changes have been known for some time, and will be priced in, but they represent further setbacks for the competitiveness of the UK’s aviation sector.

 

With costs linked to decarbonisation of the sector also set to increase notably over the coming years, policymakers must not lose sight of the cumulative effect for customers.

 

This is particularly important as an island economy, which is dependent upon our air links for much of our international connectivity and trade.

 

Also in April, the business rates relief adopted during Covid to aid the sector’s recovery will be removed. Combined with revaluations, many high street travel agents may see increases in their rate bills.

 

Abta has been making HM Treasury and politicians aware of the impact of these changes for some months.

 

While, in general, increases in rates across travel are lower than seen elsewhere, such as in hospitality, with some even seeing reductions, it is still the case that many SMEs will be facing significant hikes.

 

This will be especially difficult at the same time as energy costs are once again expected to be on the rise.

 

Adding further to the pressures on businesses, employment costs are also set to increase in the coming weeks. The National Minimum Wage increases on April 6 to £12.75, with the rate for those aged under 21 rising more quickly to £10.85.

 

Businesses should also be aware that the Employment Rights Act 2025 marks the start of the biggest shake-up of UK employment law in years.

 

From April 6, employees gain day-one rights to statutory sick pay and key family-related leave, including paternity leave. Further reforms are expected in the months ahead as the government continues its consultation.

 

Abta is urging members to review their policies now to ensure they are compliant and to seek professional advice, where needed.

 

Abta’s research that shows that outbound travel alone generates £52 billion for the economy each year, supporting more than 818,000 jobs across every region of the UK, as well as bringing huge social value.

 

It’s been a notable feature of this government that ministerial speeches have often included explicit acknowledgements of travel, including, for example, the Chancellor’s recent reference to holidays as an aspirational desire for families in her Spring Statement speech.

 

We’ve also seen the government hang its hat on the sector when it comes to future growth plans – most notably through support for expansion at Luton, Gatwick and Heathrow airports.

 

Whilst public expressions of support are welcome, what is more important is that policymakers are making conscious efforts to create an environment that helps travel businesses to succeed.

 

This is where our conversations with government and politicians focus on competitiveness and the cumulative impact of changes to taxation, policy, and regulation.

 

The topic will continue to be covered through our ongoing and proactive public affairs programme, as well as the work we deliver in collaboration with partners, such as those in the Abta-organised Future Travel Coalition and the All-Party Parliamentary Group on the Future of Aviation and Travel.

 

With the right policy and regulatory framework in place, we know that travel is well-positioned to grow further in the years ahead.

 

Abta research finds the industry has the potential to contribute £62 billion in GVA annually by 2030, adding over 100,000 jobs too.

 

However, to continue to thrive, we need the government to recognise the barriers facing our industry and to work in partnership with us to ensure the right environment exists to ensure travel businesses can continue to prosper.