APD won’t rise again, say reports

The industry is getting its hopes up today after reports that there won’t be another rise in Air Passenger Duty announced in the Budget on Wednesday.

Reports in the national media today claim Chancellor George Osborne will not go ahead with a planned increase in November, although this has not yet been confirmed.

The Guardian newspaper said the decision is designed to help holidaymakers, who are seen as embodying the "squeezed middle".

Travel companies from around the world have been making a last-minute bid to persuade the Chancellor to reverse plans to raise APD.

Some 65 corporate travel departments, travel management companies and tour operators have sent a letter to Mr Osborne and to the Secretary of State for Scotland Michael Moore warning that the UK is losing business to other, more affordable destinations.

The letter said: "We urge you to reduce this burden on the competitiveness of the UK for meetings, incentive trips, conventions and tourism.

"Collectively we facilitate hundreds of millions of pounds of annual travel activities, and the UK is already losing our business to European destinations that have no such duty, or whose duty is a fraction of the UK."

The Chancellor had been expected to use Wednesday’s Budget not only to increase APD for the fourth time in three years but also to extend it to corporate and private jets for the first time to raise millions more in revenue.

Critics who signed the letter to George Osborne say the UK is losing traffic to France, Ireland and other destinations due to the fact that it has the highest air passenger tax in Europe.

"To be clear, the UK is a coveted destination; however, budgets are tight around the world and just a few hundred pounds difference in cost can cause the UK to lose significant business that sustains jobs and powers the UK economy," said the letter.

Signatories include Makino in Japan, Dnata Travel Services in Dubai, Argo Travel in Greece, Qiagen Group in The Netherlands, Alfa Laval in Sweden, Travel Leaders from the U.S., Li & Fung Group from Hong Kong and UNIGLOBE Normark Travel from Canada.

US-based Business Travel Coalition chairman Kevin Mitchell, who helped organise the signatory letter, said: "The world’s travel community is indeed paying keen attention to and advising clients based upon aviation taxation developments in the UK.

"Demand is clearly being impacted by this growing tax burden. If not reversed soon, the UK will acquire a long-term and hard-to-shake image of being too expensive a destination for many business-travel related activities."

President of the Scottish Passenger Agents’ Association Brian Potter added: "This letter and the declarations of the signatories powerfully demonstrate that the UK is on the decidedly wrong track in pricing itself out of many segments of the travel market.

"Not only are we losing foreign exchange revenues and associated jobs, but the viability of our national air transportation system is quickly eroding with profound implications for regional airports and the economies they support.

"This deterioration of inbound demand, caused by a counterproductive tax policy will cause airlines to use smaller aircraft, reduce frequencies, and in some cases withdraw service altogether from regional UK airports.

"For Scotland, the APD tax together with under capacity at Heathrow really does threaten the viability of connections from London on to the UK domestic air network."

By Linsey McNeill