Air Passenger Duty (APD), a controversial tax that can add hundreds of pounds to the cost of a long-haul flight, will not be increased again until April 2012 at the earliest.
However, the announcement, made by the Chancellor, George Osborne, is unlikely to prompt many celebrations – APD remains severe, and future rises in the flight levy are expected to be very high. The much-publicised freeze is therefore, anything but a genuine attempt to reduce the cost of Britain’s flight taxes, widely recognised as among the highest in the world.
Reaction to the freeze has been apathetic. Simon Buck, of the British Air Transport Association, referred to the development as “the least that the Chancellor could have done". Mr. Buck said that the alternative (increasing APD) would have been “entirely wrong and counter-productive". Unfortunately for travellers, the government wants to earn an extra £1.5bn from APD within the next four years, meaning that the duty must increase significantly from next year.
APD is very unpopular. Manchester Airport recently complained to the government about the deleterious effect of the tax on jobs. The hub’s owner, Manchester Airports Group, remains concerned that any further rise in flight duty could force major airlines to abandon the regional airport for others on the continent.
Ryanair boss, Michael O’Leary, has levelled a number of colourful rants at the tax, while several European countries, such as Holland, have slashed the cost of APD, or removed their version of the levy altogether. Yet, despite this almost universal recognition of the damage caused by APD, the UK’s rates have increased by 325% since 2005.
Major travel authority, ABTA, has previously asked the government to consider a ‘per plane’ tax as an alternative to APD. However, George Osborne rubbished the plan in March, believing it to be illegal. ABTA claims that per plane duties would take account of a plane’s efficiency, rather than throwing all aircraft into rigid ‘tax bands’, based on distance travelled.
The recent Budget also introduced a new levy on private jets, in an attempt to bolster the UK economy. The move has been criticised by entrepreneur and Labour peer, Lord Sugar, who called it a “window-dressing publicity stunt". Lord Sugar intimated that the amount of money raised by the jet tax would be insufficient to influence the economy at even a local level.