APD on domestic flights ‘could be halved’ to boost regional connectivity

Aviation trade bodies today welcomed long-awaited plans to reform domestic Air Passenger Duty in a bid to boost regional connectivity.

A government consultation in the spring will examine options including creating a new lower domestic rate or exempting return flights.

Rates could be halved from £13 to £7 per flight after the collapse of Flybe a year ago and the Covid-19 pandemic hit passenger carryings which were already in decline from a peak of 22.6 million in 2007 to 19.2 million in 2019.

Announcing the findings of an interim report into transport connectivity by Network Rail chairman Sir Peter Hendy, Boris Johnson said he wanted to cut air passenger duty on domestic flights to “support connectivity across the country” and help the economy bounce back from the Covid-19 pandemic.

Airlines have been lobbying for a reduction in the air tax, where the standard rate for UK flights will rise to £26 per passenger per return flight next month.

The review will also look at the case for increasing the number of international distance bands.

There have only been two bands since 2015, one covering flights of up to 2,000 miles and the other for those further than that.

The consultation is expected to suggest introducing a rate specifically for domestic flights. Options include abolishing the return leg or introducing a flat £7 rate for all domestic flights.

The prime minister said: “It’s now time to build back better in a way that brings every corner of the UK closer together. We will harness the incredible power of infrastructure to level up parts of our country that have too long been left off the transport map.

“This pioneering review by Sir Peter Hendy gives us the tools we need to deliver on our ambitions for a UK-wide transport network that encompasses sea, rail, and road – and I also want to cut passenger duty on domestic flights so we can support connectivity across the country.”

Airport Operators Association chief executive Karen Dee said: “The recognition of the detrimental impact of Air Passenger Duty and a commitment to review domestic APD to reduce its impact is very welcome.

“Domestic aviation suffered a double-hit in the last year, with the collapse of Flybe and the Covid-19 pandemic, and this offers a glimmer of hope for the future.

“Sir Peter notes in his review that many of Flybe’s routes were unprofitable prior to the pandemic.

“With aviation’s recovery expected to stretch beyond 2025, this will put further routes at risk of not returning quickly or at all, not just domestically but also from regional airports to international destinations.

“That is why the government’s long-promised Aviation Recovery Package must set out an ambitious strategy to return international and domestic connectivity to the UK nations and regions.

“APD is one of the key levers that the Government has to boost connectivity recovery but APD reform must be part of an holistic approach.

“This could include measures such as a regional connectivity start-up fund, Public Service Obligation routes, or waiving of airport charges for key routes as is happening in the Republic of Ireland.”

Tim Alderslade, chief executive of industry association Airlines UK, said: “This is really positive news that will help support regional connectivity, level up the UK, and provide a welcome measure of relief to domestic carriers facing an existential threat from the impacts of Covid.

“It will help to sustain current domestic connections – including into Heathrow, our national hub, as well as all the regions of the UK – which is essential to achieving economic growth and supporting the government’s Global Britain agenda.

“We look forward to working further with the Hendy review and ministers and would urge as much speed as possible in the consultation process.”

British Airline Pilots Association general secretary Brian Strutton said: “We welcome the government’s announcement of a consultation on reform of domestic APD.

“It is important that domestic connectivity is reinvigorated post-Covid as this is something which can really help power our economic recovery. This is especially important given the collapse of Flybe and its extensive UK route network last year. 

“The double taxation of domestic flights is an anomaly which is a real barrier to new routes being established and new connections being made between the regions and nations of the UK.”

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