LONDON: The UK government is to increase Air Passenger Duty (APD) – an airline ticket tax – on premium tickets from April 2019.
APD is already the world’s highest tax of this nature. Currently, rates for economy-class passengers are £13 ($17) for short-haul flights (within 2,000 miles of London) and £75 for long-haul (more than 2,000 miles). Business-class passengers pay £26 and £150 for short- and long-haul journeys respectively. Charges levied on executive jet passengers are even higher, at £78 for short-haul and £450 for long-haul.
These rates are already scheduled to rise in April 2018, as a result of a tax increase announced in 2016. APD on short-haul economy-class flights will remain at £13, but that for long-haul will rise to £78. Business-class passengers will pay £26 and £156 for short-haul and long-haul respectively.
In his Nov. 22 Budget speech the UK’s finance minister, Phillip Hammond, told the lower house of parliament that APD rates for economy class passengers would be frozen for the tax year starting April 2019, but that this loss to the treasury would be made up by further rises for both business-class and executive-jet passengers.
Business-class passengers on short-haul flights will see no rise in the £26 rate, but the levy for long-haul services will climb to £172. Executive jet passengers’ rates will climb even more, at £78 for short-haul and £515 for long-haul.
The move was widely described in the aviation sector as a missed opportunity to remedy what airlines and airports generally regard as a punitive charge that affects their competitiveness.
“The change announced on APD is simply a sleight of hand move by the treasury,” Airlines UK chief executive Tim Alderslade said. Airlines UK is the industry body representing UK carriers.
“The total tax take from APD is not being cut – currently at £3.3 billion, it will hit £4 billion a year in 2022-23 and remains the highest in the world, and is far more than those levied by our competitors, especially in Europe.
“Increasing the long-haul premium rate…potentially threatens the viability of some long-haul services that rely on non-economy class passengers. It also doesn’t do anything for the UK’s ability to open up new links to emerging markets, in particular from regional airports where such services are in short supply or non-existent.”
His comments were echoed by Stobart Aviation CEO Glyn Jones. Stobart is the owner of London Southend Airport, a small regional facility to the east of the capital.
“It’s disappointing that the chancellor has missed the opportunity of reforming short-haul air passenger duty. Smaller airports need help to compete on a level playing field, particularly with Brexit around the corner.
“A partial freeze on the tax is woefully short of what we need. It should be removed from smaller airports, which would encourage airlines to base more flights outside the larger airports.
“Smaller airports need a reasonable return on the significant capital that is invariably invested. It’s not difficult to see what the result of increasing costs and falling demand due to Brexit could have on these businesses.”
