Airlines and business travellers have welcomed the reform of the Air Passenger Duty (APD) on UK flights announced by Chancellor George Osborne in his Budget, 19 March 2014.
The flight tax’s existing banding system sees travellers’ rate of APD calculated according to the distance between London and the destination country’s capital city. That means flying 4,500 miles to Jamaica costs £300 in APD while travelling 7,000 miles to Hawaii sees the tax charged at £240. But the Chancellor announced a change to the banding rules so that all long-haul flights will now carry the same tax as a flight to the US. He also put a tax on private jets, which had previously been exempt.
“Treating all long haul flights the same is a welcomed economic initiative from the Chancellor,” according to the Dale Keller, Chief Executive of the Board of Airline Representatives in the UK (BAR UK).
“The Government has finally acknowledged what the industry and business knew all along – that the highest rates of aviation tax in the world were a brake on driving the UK’s economic growth with emerging markets,” he added.
“With regards to new route support from regional airports, we will need to evaluate any potential competitive distortion that could result, however, the Government’s intentions are clearly supportive. Of course, we would like the Chancellor to go further still on reducing APD but this is a step in the right direction and BAR UK will continue its engagement with the Government to deliver the fair and proportionate aviation tax that the UK deserves,” Keller said.
Events and communications agency TFI’s MD Simon Maier (pictured) said the existing system was in urgent need of investigation and, there on, change. “The anomalies between destinations seem unfair – and damaging to the tourism and events industry – although, to be honest, by how much is hard to ascertain,” he said.
“The government has to find a new system which is fairer and more affordable for all travellers and addresses green concerns in a fair and equitable manner. The UK is an expensive country from which to fly – and equally to fly into. That in time will restrict event opportunities for the UK without action. Current action is therefore to be welcomed,” Maier added.
APD has risen by up to 470 per cent since 2007. A Virgin Atlantic spokesman said: “This is a very welcome simplification to remove some of the biggest distortions of the current system, which the Chancellor himself admitted is crazy and unjust. The Government has rightly recognised the damage APD is having on exporters and the travelling public alike.
“A tax system which penalised high growth emerging economies such as China and India was always contrary to the Government’s stated policy on trade and exports, so this is a positive step that recognises the impact of this economically damaging tax.
“There is a growing body of evidence demonstrating the huge economic benefits to the UK of reducing or abolishing APD and we hope that the Government will continue to go further in the long run.”
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