The UK announced another increase in its Air Passenger Duty (APD)—a departure tax—on the same day the country’s transport minister emphasized how important airports are to the nation’s future prosperity.
In his annual budget speech Oct. 29, finance minister Philip Hammond said long-haul flights from UK airports would see APD—already the world’s highest departure tax—increase in line with inflation.
This will see the APD for economy-class seats on long-haul flights—more than 2,000 miles—rise by £2 ($2.60) to £80, while premium cabin passengers will see the APD rise £4 to £176. The new rates take effect in spring 2020. The APD for short-haul flights will be frozen.
APD is estimated to add £3.5 billion annually to the government’s coffers.
On the same day as the budget speech, transport minister Chris Grayling told the Airport Operators Association, “We will … continue to seek new and improved bilateral Air Services Agreements with the rest of the world. Aiming, as we always have, to improve connectivity, choice and value for money for businesses and consumers. … It has never been more important to demonstrate that Britain is open to the world.”
The government has been saying for some time that Brexit, the country’s exit from the European Union, will give it freedom to strike trade deals around the world and has been stressing that the UK is “open for business.”
The rise in APD met with derision from the airline industry.
“It’s ironic that this Brexit budget has undermined Britain’s global competitiveness by upping Air Passenger Duty, the world’s highest aviation tax, again,” International Airlines Group, parent company of British Airways, said in a statement. “Last year, British Airways passengers paid £682 million in APD. We want to offer more flights to key trading markets, like our European competitors, but APD stifles route development to new emerging markets.
“This outdated tax also costs UK jobs and growth. If Britain wants to compete on the global stage post Brexit, it should be scrapped now.”
The Association of Air Charter Professionals described the rise as “a regrettable decision and urges that UK APD should be drastically reduced rather than increased. With Brexit a matter of months away it is important that passengers flying to and from the UK can do so at competitive rates, rather than finding that up to 25% of their air fare consists of APD.”
ATW asked the Treasury how another rise in APD was compatible with Grayling’s sentiment. The department was unable to provide a response prior to publication.
ATW
