Air tax to rise on premium tickets

Air passenger duty on short-haul and long-haul economy flights will be frozen from April 2019, but the tax on premium long-haul tickets will increase.

Chancellor Philip Hammond announced that private flights will also be taxed more heavily from 2019.

Delivering his 2017 Budget, the Chancellor said the increases would pay for the freeze in APD on the cheapest tickets, which, he said, would help families and businesses.

However, the travel industry was disappointed the Chancellor didn’t announce a cut in APD.

ABTA’s director of public affairs Alan Wardle said: “We recognise there were tough decisions for the government in this Budget and freezing APD for leisure travellers is a welcome step forward.

“However, we believe this is a missed opportunity to decisively cut this tax. We will continue to have the highest levels of APD in Europe and amongst the highest in the world. We will continue to push for a substantial cut which will help travellers and ensure the UK is well placed to trade with the rest of the world post Brexit.”

Adrian Parkes, chief executive of the GTMC, said it was a ‘short-sighted stance’ on APD.

“For the UK to be a lead player on the global stage UK businesses should be encouraged to travel longer distances to emerging markets,” he said.

“Increasing the standard and higher rates of APD on long-haul builds a very real barrier to business travel and will only serve to discourage UK businesses from developing international trade deals further afield.”

The move to increase APD on premium long-haul air fares was also criticised by business travel agent American Express.

Jason Geall, vice president Northern Europe, American Express Global Business Travel, said: “We are extremely disappointed by the Chancellor’s decision to increase air passenger duty on long-haul business travel.

“On one hand the Government talks about forging new trade relationships with non-EU marketplaces, while on the other it increases the cost for businesses to travel and trade.

“What was initially introduced as an environmental tax has become a stealth tax on trade. This is a massively shortsighted decision made by a Chancellor who purports to be pro-business.

“Much has been said about the post-Brexit UK being an outward-facing, export-led economy; but these words must be matched by action on airport expansion in the southeast, improving transport links to regional airports and the removal of APD.”

He said the business travel agency and its clients were concerned too about the government’s lack of progress on Brexit negotiations.

“Uncertainly of this nature is bad for business. We do not yet know how the separation will impact business travel. Questions about border controls, travel visas, data privacy, travel and health insurance, open skies and air passenger rights are being asked, but there are no answers.

“GBT is in regular contact with parliamentarians and civil servants, and while we are encouraged to hear about plans to develop trade opportunities in non-EU marketplaces, talk is cheap. For the good of the economy and British business, decisions need to made very soon.”

Flybe said in a statement: “We are disappointed that the Chancellor has once again missed the opportunity to lower Air Passenger Duty.

“The UK’s APD is among the highest in the world and it is a highly damaging tax which penalises domestic travelers. Reducing APD and supporting domestic aviation would have been in line with the Government’s stated aim of spreading economic growth more evenly across the UK – this is sadly another missed opportunity to act.”

Southend Airport’s owners Stobart Aviation said the partial freeze on APD was ‘woefully short’ of what is needed. It is calling on the Government to abolish APD for smaller airports.

The Chancellor said he woud deliver a review on the impact of APD on Northern Ireland tourism, which has to compete with lower tax rates in the south of Ireland, at next year’s Budget.

UKinbound, chief executive officer Deirdre Wells OBE said: “It’s encouraging to hear APD feature on the Government’s agenda and that this tax on trade will be frozen on all short-haul and long-haul economy flights.

“We’re also pleased to hear that a review will be undertaken regarding the impact of APD and VAT on tourism in Northern Ireland. However, APD’s detrimental effect on businesses across England, Scotland and Wales should also be investigated. The Government’s commitment to a Brexit ready Britain will be undermined if the review does not cover all four corners of the UK.”