The hike in APD on long-haul premium travel in last week’s Budget came with no warning to the industry.
That is according to Airlines UK chief executive Tim Alderslade who told the Business Travel Association (BTA) conference in London on Monday: “The Treasury needed money to cut national insurance. It was last minute. It’s frustrating – so disappointing. But the Treasury just sees pound signs when it comes to travel.”
Alderslade acknowledged having “some very difficult discussions with airlines last week”.
But he said: “I’m afraid we have to take it on the chin.”
Chancellor Jeremy Hunt announced “a one-off adjustment” in the rate of APD on “non-economy flights” in his Budget, which will kick in from April 2025. It will mean an 11% rise in duty on premium economy and business-class fares, taking the band B rate to £216 on flights to destinations including Egypt, the UAE, the US and Caribbean, and £224 on flights over 5,500 miles to Buenos Aires, Bangkok, Cape Town and beyond.
Rates are due to rise by much less this April, with APD on short-haul economy flights remaining at £13 and a £1 rise to £88 on medium and long-haul (band B) or £92 (band C). There are also below-inflation rises on long-haul premium fares. The short-haul economy rate will not change next year either, and band B and C economy rates will rise only another £2.
There was no pre-warning. Normally we would get a call two hours before. There was nothing this time
A senior aviation source noted: “The Treasury whacked the increase all on premium. It’s a lot on a premium economy flight to the Caribbean or US.”
Industry reaction was muted initially as representatives had no warning of the announcement. The source told Travel Weekly: “There was no pre-warning. Normally we would get a call two hours before. There was nothing this time.”
Alderslade told the BTA: “We have to emphasise the damage this will do.” But he described talking to the Treasury “as at times like going on the world’s worst first date, either officials don’t say anything or they just say ‘No’,” and he warned: “We have a worry on APD now. The state of the public finances is poor.”
Chief executive of The Advantage Travel Partnership Julia Lo Bue-Said, who represents outbound travel on the Tourism Industry Council with government, asked: “How do we address the fact that outbound travel is not mentioned?”
Alderslade suggested: “The challenge outbound travel has is to get the government to take it seriously. There is still the assumption outbound travel takes money out of the economy. That is particularly the view of the Treasury. Saying how important we are with big numbers and reports is not going to move the needle.”
He added: “The industry lets itself down with too many voices and too many asks. Distil what you want into two or three items.”
Tourism Alliance executive director Richard Toomer agreed, saying: “None of us is under any illusion that any of the things we care about is going to feature in the general election.”