Business

Airlines urge review as air passenger duty rises by 8%

  • 1 April 2012
  • From the section Business
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Air passenger duty (APD) has risen by 8%, as announced by the government in the Autumn Statement last year.

For short-haul flights, the tax has increased from £12 to £13. For long-haul flights of more than 4,000 miles, it has gone up from £85 to £92.

In light of the increase, airlines called on the Treasury to review the impact on "hard working families".

A Treasury minister said the majority of passengers will only pay an extra £1 as a result of the rise.

Also as of 1 April, corporation tax in the UK falls by 1% to 24%.

The changes in APD will also see it extended to private business jets for the first time.

'Tax review'

In a joint statement the bosses of Easyjet, British Airways owner IAG, Ryanair and Virgin Atlantic said the increase would "hit millions of hard-working families and damage the wider economy".

"We urge [Chancellor] George Osborne to make APD the first tax to be examined under the Treasury's new review of the wider impacts of taxation on the economy," they said.

They added that further planned rises in the tax before 2016 would mean a family of four paying £500 in tax to fly economy class to Australia. In 2005, they said, the same family would have paid £80.

Sir Richard Branson, who owns Virgin Atlantic, told the BBC increasing the tax might put some people off visiting the UK.

"Tax is all very well when it's not actually costing the country money and I think it's getting to a stage where it's actually going to cost the country money," he said.

The business group the CBI has also called for a lower rise in APD.

The government defended the rise by saying it had frozen APD last year.

"Most passengers pay only a pound more on their flights as a result of the rise," said Economic Secretary to the Treasury Chloe Smith.

"We have made aviation tax fairer by bringing private business jets in for the first time.

"We were able to take action to freeze APD last year and we have been able to be clear about what will then happen to it this year - I think that does represent a fair deal for passengers and I think it does also represent a fair deal for businesses, who are today enjoying a historically low rate of corporation tax," she said.

There are four bands of APD. Tax on short-haul flights has gone up from £12 to £13.

Longer flights up to 4,000 miles have seen an increase from £60 to £65, while tax on flights between 4,000 and 6,000 miles has risen from £75 to £81.

APD on flights above 6,000 miles has increased from £85 to £92.

All these figures refer to economy class flights; business class passengers pay more.

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