October 24, 2021
 

Domestic APD could be halved

The aviation industry has welcomed long-awaited plans to reduce Air Passenger Duty on domestic flights.

The Prime Minister confirmed today there will be a consultation in the spring to examine various options, including a new lower domestic rate or making return flights exempt.

Rates could be halved from £13 to £7 per flight in a bid to boost regional connectivity and help the economy bounce back from the Covid-19 pandemic.

The review will also look at increasing the number of international distance bands. Since 2015 there have only been two bands, one covering flights of up to 2,000 miles and the other for greater distances.

The plans were announced today, along with the findings of an interim report into transport connectivity by Network Rail chairman Sir Peter Hendy.

Tim Alderslade, Chief Executive of Airlines UK, said: “This is really positive news that will help support regional connectivity, level up the UK, and provide a welcome measure of relief to domestic carriers facing an existential threat from the impacts of Covid.

“It will help to sustain current domestic connections – including into Heathrow, our national hub, as well as all the regions of the UK – which is essential to achieving economic growth and supporting the Government’s Global Britain agenda.

“We look forward to working further with the Hendy Review and Ministers and would urge as much speed as possible in the consultation process.”

Airport Operators Association Chief Executive Karen Dee said: “The recognition of the detrimental impact of APD and a commitment to review domestic APD to reduce its impact is very welcome. Domestic aviation suffered a double-hit in the last year, with the collapse of Flybe and the Covid-19 pandemic, and this offers a glimmer of hope for the future.

“Sir Peter notes in his review that many of Flybe’s routes were unprofitable prior to the pandemic. With aviation’s recovery expected to stretch beyond 2025, this will put further routes at risk of not returning quickly or at all, not just domestically but also from regional airports to international destinations.

“That is why the Government’s long-promised Aviation Recovery Package must set out an ambitious strategy to return international and domestic connectivity to the UK nations and regions. APD is one of the key levers that the Government has to boost connectivity recovery but APD reform must be part of an holistic approach. This could include measures such as a regional connectivity start-up fund, Public Service Obligation routes, or waiving of airport charges for key routes, as is happening in the Republic of Ireland.”

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