Air passenger duty is doubled

Listen to this article

00:00
00:00

Airlines and travel groups on Wednesday attacked the doubling of air passenger duty, accusing the chancellor of imposing a “poll tax on the skies” that would hurt ordinary travellers and be an ineffective way of tackling global warming.

Gordon Brown, chancellor of the exchequer, said that all rates of air passenger duty (APD) would be doubled with effect from February 1 “in recognition of the environmental costs of air travel.”

Tour operators demanded a meeting with the chancellor, saying his decision to introduce APD will cost the industry £20m because 4m holidays from February are already booked and increases in APD below 2 per cent are absorbed by the industry.

For short-haul travel within the European common aviation area the duty per departing passenger in the UK will be increased from £5 to £10 on economy fares and from £10 to £20 on business class fares. For long-haul flights the duty has been raised from £20 to £40 on economy fares and from £40 to £80 for business and first class fares.

Mr Brown said that the lowest rate of £10 would apply to more than 75 per cent of journeys. The increase in duty would secure extra resources for “our priorities such as public transport and the environment.” The amount raised by APD will rise from £1bn to £2bn a year.

But British Airways and others attacked the move. BA called the increases “highly regrettable and Martin Broughton, its chairman, warned there was a serious risk that airlines could become “demonised” in the same way as tobacco companies and smoking.

BA said that air passenger duty was “an extremely blunt instrument that provides the Treasury with extra funds for general public expenditure without any benefit to the environment whatsoever.” The increase in air passenger duty was “revenue-raising pure and simple with aviation being treated as a cash-cow.”

The doubling in the flat-rate duty will have the biggest impact relatively on the lowest airlines.

EasyJet, the leading UK low cost airline, said that the doubling of air passenger duty on environmental grounds represented “a complete U-turn of government policy.” In the aviation white paper three years ago the government said it recognised “that because of its blunt nature air passenger duty is not the ideal measure for tackling the environmental impacts of aviation.”

The federation of Tour Operators described the timing as “a punitive windfall tax”, while First Choice, whose shares fell on Wednesday nearly 2 per cent, said it was already implementing its own environmental measures and should be exempt from the increase.

Gary Shiels, tax partner at PwC, said the narrow margins in the travel industry meant holidays would cost more than just the rise in air passenger duty. “This will increase consolidation of the industry,” he said.

Both airlines and travel groups called on the government to support the inclusion of the aviation industry in the EU emissions trading scheme.

Friends of the Earth, the environmental group, said the increase in duty was not sufficient to tackle aviation emissions.

Jeff Gazzard, spokesman for the GreenSkies Alliance environmental group, said the “alarming” growth in aviation emissions from rising volumes of air travel would continue unless the government “raises the duty again and again to reach an environmental target to either stabiliise or reduce greenhouse gases from air transport.”

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.