May 18, 2024

Air Passenger Duty rise ‘disastrous’

The Treasury has announced a rise in 2025/26 Air Passenger Duty for premium fares, despite earlier promises not to raise the tax.

In today’s Budget, Jeremy Hunt said he would make a “one-off adjustment” to rates of APD on “non-economy flights, only to account for high inflation in recent years.”

APD for passengers in premium cabins on departures from UK airports for flights of 2,001 miles to 5,500 miles will go up from £191 today to £216 from April 2025.

The tax for premium cabins on flights of more than 5,500 miles will rise from £200 today to £224.

APD on economy fares and on premium flights under 2,000 miles will only rise slightly.

The GBTA and ITM issued a joint statement saying a further increase in APD will hinder business growth and international collaboration for business travellers with little positive environmental impact.

“GBTA and ITM are calling for the UK Government to reinvest the APD tax, originally labelled a ‘green tax’ into policies to help reach these goals and improve the sustainability performance of the aviation sector through improved infrastructure or alternative fuels,” it added.

Clive Wratten, CEO of the Business Travel Association (BTA), said the increase in non-economy APD is “disastrous for the economic welfare and wellbeing of British businesses and their employees”.

“Contrary to common misconceptions, business travel is not just for the wealthy. This tax will hinder growth for small and medium enterprises through limiting international collaboration opportunities. It will hit charities, academics and researchers alongside businesses of all sizes combatting rising costs in every area,” he said.

“There is no mechanism for ensuring that the monies from this tax will go into innovation in the airline sector nor into Sustainable Aviation Fuels. This is therefore just another tax on British businesses.”

Martin Ferguson, Vice President of Public Affairs for American Express Global Business Travel, said the move was “hugely disappointing”.

“Firstly, the Government has broken its vow not to increase taxes that discourage air travel. Secondly, for the government of an island economy, particularly in the post-Brexit environment, to increase this stealth tax and make it more expensive for businesses to travel and trade, is very short sighted.

“Travel and trade contributed £237.1 billion to UK GDP in 2022 at a difficult moment for the country’s economy. Travel is not the problem; carbon is. The Chancellor should now commit to ring-fencing APD to kickstart UK Sustainable Aviation Fuel production. This will start the decarbonisation of a sector we know will be hard to electrify and which is critical to the health of the UK economy.”

A Virgin Atlantic spokesperson said: “UK Government has failed to acknowledge that by increasing APD, the highest aviation tax in the world, they are penalising families travelling in Premium, as well as business travellers.

“An increase to the standard rate of APD undermines the competitiveness of UK economy, discouraging leisure travellers who have been crucial in aiding the industry’s recovery. UK Government should not underestimate the importance of leisure travel and the adverse impact this will have on hard working Brits, in its rush to raise yet more revenue from the sector.” 

Julia Lo Bue-Said, Chief Executive Officer, The Advantage Travel Partnership, said: “We are hugely disappointed that the Chancellor has once again penalised passengers who are choosing to travel in non-economy seats. 

“There are many reasons why people choose to book non economy seats. For example, those who have mobility issues, those who simply need more room and those who need space to work. There is no question that this is a tax on hard working people and business travellers.”

But Scott Gillespie, founder of US-based consultancy firm tClara and Board Advisor to Clarasight, said the rise in APD would help reduce the number of trips taken and, therefore, reduce carbon emissions.

“If a business traveller can’t justify an increase of let’s say, £100, how valuable could that trip have been? Price increases of any kind, be they taxes or fare hikes, will have this effect. It’s the quickest and surest way to diminish aviation’s emissions.”