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Travel industry angry at expected APD rise in Budget

Industry sources reacted angrily to reports Chancellor Rishi Sunak planned to raise air passenger duty (APD) on long distance flights while halving the domestic APD rate in Wednesday’s Budget.

Treasury briefings to the media suggested the Chancellor would act in line with proposals in a Treasury consultation on APD reform in March.

These included plans for both a new domestic APD band and new ‘international distance’ band for flights of 5,500-plus miles. Current APD rates are for up to 2,000 miles and over 2,000, with premium class passengers paying double the rate on economy fares.

The consultation suggested the new band “would reinforce the ‘polluter pays principle’ by ensuring those who travel furthest internationally and have the greatest impact on the environment incur most APD. This would align APD more closely with our environmental objectives . . . as well as maintaining the sector’s contribution to the public finances.”

The industry has long campaigned for the double APD burden on both legs of a domestic return flight to be removed. But a leading aviation source told Travel Weekly: “This is just an excuse to grab more money.

“‘The polluter pays’ argument is bollocks. If you drive a clean car you pay less tax. If you fly in a cleaner aircraft you don’t. Increasing long-haul APD only makes sense on a Treasury spreadsheet.”

A second source insisted “it’s absolutely not an environmental measure”, saying: “It’s disappointing to have no warning or discussion on this when we had the consultation.

“It’s not even a cut in domestic APD. It’s removing an anomaly, bringing it in line with APD on a flight to Frankfurt or Paris.”

Abta director of public affairs Luke Petherbridge argued: “Now is not the time to be increasing APD. The industry is only at the beginning of recovery and any increase risks deterring people from travelling. We need the government to look at how it can support the sector. APD is not and never has been an environmental tax.”

A rate targeted at flights of more than 5,500 miles would include South Africa, Mexico and eastern South America, Southeast Asia, Japan and Australasia.

The current Band B long-haul rate of APD is due to rise by £2 to £84 per passenger from next April and the premium rate by £5 to £185.

Holiday Extras’ group chief executive Matthew Pack said: “If the leaks are true and that’s what’s coming in the budget for travel, we’re going to see record long-haul bookings over the next five months – both from pent-up post-lockdown demand, but also people scrambling to make their long-haul bucket-list before the tax change causes long-haul flights to go up by as much as £500 next spring.”

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