Traveltek

Published on Thursday, December 4, 2014

Chancellor outlines plans to abolish air tax for children



Chancellor George Osborne has bowed to pressure to abolish air passenger duty for children under 12.


The move will apply to economy flights from next May and the tax will be abolished for all children under 16 from the following year.


Making the announcement during his Autumn Statement yesterday, Osborne said he wanted to 'reduce the cost of tickets for families directly'.


He said he would go further than requested by MPs, who had suggested the tax was abolished for under 12s only, and extend tax-free economy flights to all under 16s from 2016.


Osborne also stated that he will be forcing airlines to display fuel surchages as a separate item on airfares to ensure that the recent drop in oil prices is passed on to passengers.


Tax-free flights from children under 12 will be introduced next April when the two highest APD tax bands will also be ditched in a move announced by Osborne in his most recent  Budget.


The travel industry was quick to welcome the changes, but many said the didn't go far enough.


And Thomas Cook chief air travel officer Christoph Debus urged the Chancellor to review inflationary increases to APD and not to recoup the savings announced today by increasing APD further.


He said: "Further to the simplification of long-haul APD bands announced earlier this year, the abolition of this unfair tax for the under 12's next May - and under 16's a year later - is great news for families, many who will be halving their tax bill on flights. 


"We are pleased that the Chancellor has implemented this alongside the long-haul changes from next year, meaning millions of families will benefit when they choose their next summer break in the traditional time for holiday booking in the New Year.     


"We would urge the Chancellor to review any inflationary increases to APD and not to recoup the savings announced today by increasing further this tax burden on the British holidaymaker."  


ABTA chief executive Mark Tanzer said: "ABTA is delighted with today's announcement by the Chancellor that Air Passenger Duty will be scrapped on economy flights for children - a clear indication that this Government has listened to the case made by the A Fair Tax on Flying campaign to Scrap the Tax on Family Flights.


"This is a hugely positive step for UK families. In tandem with the Government's decision at the Budget to abolish the higher-rate APD bands C and D from April, there appears to be a growing consensus in the Government of the damaging impact of this blunt and harmful tax.


"However, UK businesses and consumers endure paying one of the highest flight taxes in the world. ABTA will continue to make the case that the positive momentum from Treasury on APD must continue, starting with a much needed review of the tax more widely, with a view to setting a fairer, more competitive level of APD.


"We look forward to hearing the detail of this announcement and to working with Government on implementation."   


The abolition of the tax will lead to a saving of between 5% and 7% on airfares for a typical family of four on a long-haul holiday, said strategy and marketing consultants Simon-Kucher & Partners.


Partner Dimitris Hiotis said: "As this is a highly elastic industry, we are likely to see two key outcomes. We will probably see an increase in demand for long-haul holidays, benefiting players with particular expertise and focus on that market, such as BA Holidays and Virgin Holidays. 


"We will also potentially see a shift of holiday preferences from mid-haul to long-haul, as the latter become slightly more affordable for families than before; again to the benefit of long-haul tour operators and airlines.


"This will also, to a smaller extent, help reduce the cost of holiday prices during the school holiday period, another highly contested topic. However, a lot of that cost is driven by demand and the underlying higher cost in the local hotels; hence, the impact will be less pronounced there."


Carolyn McCall, CEO of easyJet, whose share price rose immediately following the announcement said: "This is really good news for families which will provide savings of £13 per child on flights to destinations in the UK and Europe and as much as £69 on our longer flights to Egypt and Tel Aviv..


"We support anything which makes travel easier and more affordable for our passengers and we hope this is the first step towards the complete abolition of APD."           


Board of Airline Representatives UK chief executive, Dale Keller, said:  "We welcome the Chancellor's announcement which will mean a fairer deal for families.


"This is the second reform to APD announced this year and demonstrates the growing awareness within Government that the world's highest air tax needs a severe pruning in order to boost the UK's global competitiveness and create more jobs.


"Scrapping APD for children not only benefits UK families but also stimulates growth in inbound tourism and the efforts of the A Fair Tax on Flying campaign is to be applauded."


In a statement prepared in an anticipation of the Chancellor's announcement today, Jason Waldron, product and marketing director at Broadway Travel, said: "This is the best news families have had for a long while and it means hard-working families will be see their holiday cash go further next year. Common sense has prevailed.


"By scrapping APD for under-12s, the Chancellor has made the family holiday a little more affordable. Whilst wages have hardly risen over the past few years, if at all, APD charges have increased significantly in recent years. There's no doubt the extra costs from extortionate APD charges have meant families have had to reassess their holiday plans.


"And, since the rules have been tightened on parents taking children out of school, it has meant many families have not been able to afford the getaway they dream of.


Waldron added: "It seems George Osborne took on board Andrew Bridgen MP's argument that children are exempt from taxation such as VAT on food and clothing. The benefit of scrapping this tax on children will be directly felt by families."


Richard Singer, the European managing director of Travelzoo, said the first pillar of what he has coined as the 'Parent Trap' - the combined effect on fines for taking children out of school during term time and high taxes - had been knocked down.


However, he said the change did not go far enough. "The removal of APD for under-12s is a positive and very welcome change that will offer some relief to UK families with school-aged children, who are currently forced to travel during peak season.


"We see George Osborne's announcement as the crumbling of the first pillar in the Parent Trap. But it does not go far enough. With Scotland looking to abolish APD altogether and Ireland already free of this tax, England's airports are going to be significantly disadvantaged when it comes to competing for outbound passengers.


"This is something the Chancellor has failed to recognise, despite the best efforts of the travel industry to explain why APD should be scrapped on all flights out of the UK."


 


 

Story Image



Your Comments

, be the first to post a comment.
Your email:






Email other comments made to this story


NOTE: Comments are subject to admin approval before being posted.
Mole Poll
Has the Brexit fiasco started to hit your sales ?
Yes 53.66 %
No 46.34 %

Thank you for your vote




Move scroll bar (above) left to right for more videos!

UPCOMING EVENTS
Sponsored features

Wow, it's a game changer!

Welcome to the world of Stuba!

Stuba is the unified brand following the merger of getabed and roomsXML.  Stuba.com is a brand new website, showcasing the very best product and technology  from the combined business

\m