Business Travel Show Europe Kick Off, 23 February,
Global Travel Risk Summit Europe, April 2023,
3rd Annual Sustainable Business Travel Summit
New UK chancellor Rishi Sunak has delayed a review into the
UK’s domestic Air Passenger Duty (APD) that was promised as part of a bid to
save Flybe before its collapse, to the dismay of the travel industry.
Back in January, then-chancellor Sajid Javid said the
government would review domestic APD with the possibility of cutting the tax in
order to help Flybe, which at the time was struggling to pay a backlog of money
owed. However, Javid was pushed out of the Cabinet last month and replaced by
Sunak, who delivered the Budget today just weeks into the job, while Flybe has
since gone into administration under the burden of a drop in demand due to
Sunak said the results of a consultation on APD will be
published later in the spring, with short-haul rates frozen for another year.
However, the rate for long-haul economy flights will
increase another £2 in April 2021 to £82, while those in premium economy,
business and first class will rise by £4 to £180.
Passengers in the UK already pay the highest rate of taxes
in Europe. Airlines have waged a war of words on APD for years, saying the fee
is preventing both domestic and international routes from being established
because it makes them not financially viable.
The news has received a mixed response from the industry,
with Dale Keller, chief executive of the Board of Airline Representatives in
the UK (BAR UK), saying: “The entire aviation industry will be deeply
frustrated that the chancellor has shown zero support to a vital sector which
the country relies upon to deliver connectivity and enable economic prosperity.
“It is ludicrous that he has given concessions to alcohol
but increased APD, which is a tax on business, trade and consumers. Airlines
had requested a temporary six-month waiver of APD as a supporting measure while
they deal with this unprecedented situation [the Covid-19 outbreak]. The lack
of action and support for aviation in this Budget demonstrates a government and
chancellor with little regard for sustaining the UK’s domestic and
international air connectivity at the very time it is needed most.”
Jason Geall, VP and regional general manager for Northern
Europe at American Express Global Business Travel, commented: “It is reassuring
to see that the government is taking some measures to support businesses during
this period of disruption. We would have liked more immediate action on
reforming Air Passenger Duty (APD), but hope that the government’s
consultation, to be published this spring, will produce policies that enable
businesses to travel, trade and thrive.”
Mark Tanzer, CEO of ABTA, added: “While we welcome the
government’s commitment to review Air Passenger Duty in relation to domestic
connectivity, we strongly urge the government to do this as part of a wider
reform process, acting as the catalyst for constructive discussions between industry
and government about a more comprehensive overhaul of the structure of APD.
Furthermore, we are disappointed by the inflationary increase in APD announced
today, which puts the UK at an even greater competitive disadvantage compared with
other countries where similar departure taxes are much lower.”
An increase in APD is likely to be welcomed by environmental
groups, however, with many campaigners saying abolishing the tax would lead to
increased emissions from flying.