Industry welcomes UK APD changes

Industry welcomes UK APD changes

Airline industry stakeholders have welcomed reforms to the Air Passenger Duty announced by chancellor of the exchequer George Osborne in the budget. 

Addressing the house of commons, Osborne said APD would be reformed down to two bands from April 2015, with bands C and D will be abolished.

From April 2015 Band B will be the highest band.

This means all long-haul flights will now carry the same tax as a flight to the United States.

In the Budget Report Osborne explained the motivation behind the move.

The statement read: “To help British businesses strengthen links with high growth markets, and to go further to make the UK an attractive option for business visitors and tourists, Budget 2014 announces that the government will reform Air Passenger Duty by abolishing bands C and D from April 1st 2015.

“This will eliminate the two highest rates of APD charged on flights to countries over 4,000 miles from Britain, cutting tax for millions of passengers travelling to China, India, Brazil and many other emerging markets.

“This will mean that flights to South Asia and the Caribbean will pay tax at the lower band B rate.

“The rates applying to private jets which offer an enhanced level of comfort will be set at six times the level of rates applying to economy class.”

APD has risen by up to 470 per cent since 2007, with a family of four paying between £52 and £376 each time they fly from Britain, depending on how far they travel.

In a statement Virgin Atlantic welcomed the move.

“A two band APD rate is a very welcome simplification to remove some of the biggest distortions of the current system, which the chancellor himself admitted is crazy and unjust.

“The government has rightly recognised the damage APD is having on exporters and the travelling public alike,” explained Virgin.

“A tax system which a penalised high growth emerging economy such as China and India was always contrary to the government’s stated policy on trade and exports, so this is a positive step that recognises the impact of this economically damaging tax.”

Placing all long-haul flights in the same bracket was welcomed by the Board of Airline Representatives in the UK.

Dale Keller, BAR UK chief executive, said: “The government has finally acknowledged what the industry and business knew all along - that the highest rates of aviation tax in the world were a brake on driving the UK’s economic growth with emerging markets.

“With regards to new route support from regional airports, we will need to evaluate any potential competitive distortion that could result, however, the government’s intentions are clearly supportive.

“Of course we would like the chancellor to go further still on reducing APD but this is a step in the right direction and BAR UK will continue its engagement with the Government to deliver the fair and proportionate aviation tax that the UK deserves.”