30 October 2009

APD: the tax slug that canes long haul travellers

SYDNEY - The British government has a nasty little surprise waiting - it’s called the Air Passenger Duty (APD) and from this Sunday, November 1, it will rise substantially.

APD will now fall into four bands - with passengers being charged according to how far they fly. The increases are planned for November this year and November 2010

The tax on the longest flights over 6,000 miles - including UK to Australia - is more than doubling from £40 now to £85 next year.

Passengers in premium-economy seats flying long haul to Australia or New Zealand will be hit hardest. The duty on these seats, which offer a little more legroom for a modest fee, will rise to £110 on November 1 to £170 in November 2010.

Premium economy passengers will pay the same APD as passengers in Business and First Class.

A family of four flying from London to Sydney or Auckland will pay £220 from November 1 and £340 from November next year.

The tax rise threatens to curb travel from the UK to long haul markets.

International long haul visitors will pay the tax when they fly out of the UK on their return journeys.

"APD is now a significant part of the overall price of the air fare and the planned increases in long-haul APD rates over the next year are a genuine threat to the commercial viability of premium economy," said Dermot Blastland, chief executive of TUI UK

When APD was introduced, the UK Government said the money raised would be used to offset environmentally damaging carbon emissions.

"There is no evidence to date of any environmental benefit, and it is ridiculous to think that holidaymakers travelling in premium seats on one of our charter flights will have to pay the same APD fee as those flying in first class on a scheduled flight," said a spokeswoman for Thomas Cook.

"When they should be doing all they can to lessen the strain on hard-working families, they are yet again making the consumer pay."

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Your Comments (1)

An 'Own Goal' for BA?

The Labour government couldn't have selected a better method to hurt BA, although BA seems to need little help in that department. It will also confirm the decision to cancel Heathrow 3 was correct and maybe even curtail airport developement as it is enough to persuade PAX to overfly the UK to Amsterdam or Paris and take the handy Chunnel rail link. We should not be surprised to hear that little environmental benefit has accrued from APD fees todate. Doubtless Brown is simply adding them to general revenues to prop up the failing UK economy. Rather than having fixed APD rates the taxes should be proportional to the ticket price. The problem is not long haul, rather it is the wastage resulting from the use of air transport as opposed to ground transportation which has been damaged by governments of either stripe starting with Beeching (remember the cuts < http://www.youtube.com/watch?v=U6OHD2uCpfU >) that continue to this day. Admittedly the UK government is pouring money into rail but they are not advancing technology by replacing the 50-year old overhead electric system with the same technology. Other countries are looking at Maglev, some have even deployed Maglev, but not Britain. What a wasted opportunity.

By J Hewson, Sunday, November 1, 2009