The travel sector has expressed disappointment over Chancellor Philip Hammond’s lack of action on air passenger duty in Wednesday’s Budget.
The campaign for cuts to APD has been ignored in the past few Budgets, although George Osborne did revaluate bands in the 2014 Budget.
Travel organisation ABTA said in a “post-Brexit” world, taxing aviation has a negative impact on businesses and future growth.
“The Chancellor’s decision to go ahead with additional increases in Air Passenger Duty is very disappointing,” said Alan Wardle, director of public affairs, ABTA.
“The post Brexit world in which we now live, is a very different one from where we were 12 months ago. Levying sky high taxes on aviation sends out the worst possible message as we look to build our business relationships and connections outside of Europe.
“APD also represents an unjustifiably high economic burden on hard pressed family budgets and ABTA urges the Government to follow the lead of the Scottish Government and make a firm commitment to halving this retrogressive tax.”
In his speech, Hammond said growth was expected to be higher – and borrowing lower – than forecast in November. However, it is then predicted to slow to 1.6 per cent in 2018 before returning to 2 per cent in 2021.
The Hotel Bookings Agents Association (HBAA) welcomed the forecast and said it will be “beneficial” to the events and hospitality industry.
“As the events and hospitality industry is growing, it needs to attract more young people to see the industry as a good career opportunity especially with concerns about potential reductions in workers from abroad,” said Louise Goalen, executive chairman, HBAA. “Optimising the living wage and providing funds to encourage 16 to 19 year olds to train in the sector are valuable initiatives to help with this.”
She added: “However, while the confirmation of the reduction of the corporation tax is good news for our members, we are disappointed that the UK’s VAT rate on hotel room accommodation, one of the highest in Europe, has not also been reduced. That would have been a positive boost to our competitiveness.”
The GTMC CEO Paul Wait said he welcomed the chancellor recognising the “importance of Britain being a key player in the global economy”, but said the lack of action on APD is damging to Britain. “We have long campaigned for reductions to APD which didn’t materialise in today’s Budget. APD therefore remains a barrier to international business travel, both inbound and outbound, and actively works against businesses tying to grow internationally,” said Wait.
American Express VP, northern Europe, Jason Geall, said despite Hammond’s optimism on the economy, the travel industry must remain “resolutely aware” of the uncertainity of Brexit.
“There are many areas directly linked to business travel and travel management that could change: Rules surrounding freedom of movement, travel visas and border control are fundamental to our models; Air passenger rights, EU open skies agreements, security and data privacy concerns will all be part of the negotiation with the EU,” said Geall. “It will be the responsibility of TMCs and travel managers to steer UK businesses through these coming years.”
He added: “That said, uncertainly about Brexit has not impacted business travel volumes so far, aside perhaps from a very short-lived dip immediately after the referendum result. Financial services and pharmaceutical sectors have had a challenging time over the last 12 months, but Brexit uncertainly has only had a very limited impact on that down-trading. Professional services and technology companies, on the other hand, have travelled much more in the past year. It remains a mixed bag across industry verticals.”