Industry leaders have slammed plans to raise Air Passenger Duty outlined in today’s Budget.

In its first Budget in 14 years, the Labour Government said APD rates have fallen behind inflation and confirmed it would be increasing all APD rates to “help correct for below-inflation uprating in recent years”.

In 2026-27, APD for domestic UK flights will rise to £16, from £14 in 2025-26.

APD for flights up to 2,000 miles will rise from £28 to £32 and flights from 2,001 to 5,500 miles will jump from £216 to £244.

The air tax for journeys over 5,500 miles will increase from £224 to £253.

For aircraft with less than 19 seats, the increases are even more dramatic, rising from £84 to £142 for UK domestic and short-haul flights, from £647 to £1097 for flights from 2,001 to 5,500 miles and from £673 to £1141 for the longest journeys.

The Business Travel Association said the increases are “deeply concerning and further burden the business travel sector”.

“Business travel is a key driver of international trade and investment. This increased APD hampers opportunities for economic growth driven by corporate travel and undermines the competitiveness of UK businesses globally,” it said.

“Increased APD threatens to limit the ability of UK companies to access overseas markets, collaborate with international partners, and secure new business opportunities.

It repeated its call on the Government to refocus APD towards its intended purpose – to help fund sustainable advancements.

Julia Lo Bue-Said, CEO The Advantage Travel Partnership, said: “APD sees another tax hike for anyone flying out of the UK, increasingly making the UK an uncompetitive destination. This will not support business growth and puts more pressure on households discretionary spend on travel, business travel and the visitor economy.” 

She also raised concerns about tax hikes for small businesses.

“The punishing tax measures announced today in the budget serve to strangle the very enterprises that form the backbone of our economy.

“With tax hikes piling on top of existing pressures, small business owners are being squeezed from every direction, leaving them with impossible choices between survival and growth.  The new tax rises come on the back of a tough few years, adding more cost to businesses  when many in our sector are still in recovery mode post pandemic.”

Joss Croft OBE, CEO UKinbound, said: “We welcome the increase in employment allowance, the freeze on fuel duty and the investment in the regional rail networks, however we are incredibly disappointed to see Air Passenger Duty increase and that businesses across the industry will see operating and staff costs rise.”

Aviation body Airlines UK called for a joined-up approach.

“Further increases in APD, in addition to rises in other business levies, will impact growth, directly hitting the pockets of ordinary travellers and making it harder for UK airlines to put on new routes,” it said.

“We need a revised and joined-up approach to the UK’s strategically vital aviation sector.”

Peter Slater, CEO of CMAC Group, added: “For short haul flights, the increased APD might seem marginal, but these incremental costs add up, especially for businesses reliant on regular short haul travel for meetings, networking and client visits.

“Businesses will need to budget carefully to manage these rising costs and may consider alternative travel arrangements that are both cost effective and sustainable.

“The 50% APD hike for private jet users could redirect demand towards commercial and more environmentally-friendly travel options, which aligns with a growing commitment to reducing carbon footprints and driving greener operations in corporate travel.

The Labour Government also announced today it will be starting a consultation on a proposal to extend the scope of the higher rate of APD to all private jets, including business jets.

“This is driven primarily by the Government’s commitment to ensuring that operators and passengers of such aircraft contribute fairly to the public finances,” the Treasury said.

“When APD was extended to private jets in April 2013, the higher rate was also introduced for the larger private jets, reflecting the higher class of service they provided.

“Eleven years later, the government is assessing whether the higher rate could be further aligned to its objectives, including whether the rate’s scope based on aircraft weight and passenger capacity remains appropriate.”