UK Chancellor abandons plans for air tax reform
Air Passenger Duty (APD) will more than double on some long distance flights, Alistair Darling, the British Chancellor of the Exchequer said yesterday (November 24).
In his "recession package" announced to the House of Commons, Mr Darling said he planned successive rises in APD from 2009 to 2010.
At the same time, he abandoned previously announced plans to introduce a tax per aircraft.
Reaction by the industry to the changes was mixed.
Many welcomed the abandonment of Aviation Duty, a "per plane" tax while most also condemned the increased levies.
- Under Mr Darling's new four band scheme, those who travel furthest by plane will pay the most.
- Under Band A, for flights in the EU, the charge will rise from the current £10 each way to £11 from November 1, 2009 and then to £12 in November 2010.
- Under Band B, for flights of more than 4,000 miles which includes some transatlantic trips, the levy will rise from £40 to £45 next year and £60 in 2010.
- Band C flights, including those to the Caribbean will rise from £40 to £50 in 2009 and to £75 in 2010.
- The tax on the longest flights, under Band D, to Asia and Australia, will increase from £40 to £60 next year and to £85 the year after.
These figures are for economy seats. The cost to premium passengers will be much higher.
For example on Band D flights, business class travellers who currently pay £80, will now pay £110 next November and £170 in 2010.
In a full year, the new APD will raise £3.06bn for the UK Treasury.
Andy Harrison, ceo of easyJet, said reform had been ditched while a tax which hits families but not private jet had been made worse.
He added: "I am dismayed that the Chancellor has failed to carry through his commitment to reform a bad tax.
"All Parties agreed that APD needed to be changed to a tax on planes not people, but now the Government has succeeded in bodging-up the reform of an already bodged tax.
"He has made a bad situation worse by increasing the burden of APD on hard working families."
BA said: "While we are pleased the Government has decided not to proceed with its Aviation Duty proposals, we are disappointed that aviation has again been targeted for increased taxation.
"Government figures show that UK airlines are already fully meeting their environmental costs.
"The tax rates proposed will mean that UK passengers by 2010 will be paying more or less double current APD rates on flights of more than 4,000 miles.
"There can be no environmental justification for this, and extra taxation is a further blow to the industry at a time when it is reeling from the combined effects of rising costs and falling demand."
The Board of Airline Representatives in the UK (BAR) said the decision to abandon the aviation tax was a victory for common sense.
Mike Carrivick, BAR UK's ceo, said: "Dropping the proposed Aviation Duty was definitely the right thing to do and the Treasury should be complimented on withdrawing its proposal.
"We welcome the decision to retain APD, but note the revised distance bands will cause anxieties to many airlines and also create some market distortions.
"Now is not the time to impose additional financial burden on the airline industry and the travelling public."
A spokesman for Virgin Atlantic said: "We are pleased that the government has partly listened to the industry by not introducing Aviation Duty, but the hike in Air Passenger Duty will hit hard-working families especially hard, with a near-doubling of the amount paid in tax by 2010 on our routes.
"Such an increase is unjustified, as the aviation industry already contributes £2bn a year via APD, which far exceeds the environmental costs of the industry.
"The increase will have an adverse impact on UK jobs and the UK economy. The industry has made, and is making, significant progress in improving its environmental record and we're disappointed that the Chancellor has penalised us further."
www.hm-treasury.gov.uk
www.easyjet.com
www.bar-uk.org
www.virgin-atlantic.com
www.ba.com