The Treasury has signalled its willingness to offer concessions on reforms to aviation tax that have been lambasted by business and long-haul airlines and drawn implicit threats of legal action from the US.

Substantive changes to the proposal to replace air passenger duty with a tax per aircraft would mark a further unravelling of Alistair Darling’s pre-Budget report of last autumn. The chancellor has already been forced to stage partial retreats on capital gains tax and the levy on non-domiciled foreign residents in the UK.