ABTA expressed its disappointment that the Government is to go ahead with an 8% double inflation rise in Air Passenger Duty rates from 1 April 2012. The announcement in today’s budget that APD rates will also increase by inflation from 1 April 2013 is a further hammer blow to the industry. The Chancellor expects to collect £2.2bn in 2011-12 from APD revenues, rising to £3.9bn by 2016-17, by far the highest aviation taxes in the world.

Mark Tanzer, ABTA Chief Executive said: “The Chancellor’s confirmation that he intends to go ahead with double inflationary rise in APD on 1 April, together with a further increase in 2013, is incredibly disappointing. The Government has repeatedly said it looks to travel and tourism as one of its key drivers of growth but instead of listening to concerns that APD is stunting this growth, not only in travel but in the wider economy too, it has chosen to significantly increase the tax burden.”

Luke Pollard, ABTA’s Head of Public Affairs added “Although APD didn’t warrant an oral mention, the urgent need to address the lack of aviation capacity in the south-east of England did. This is encouraging and is part of a carefully choreographed policy change on aviation by the Government. From Mr Osborne’s comment it looks like we will have to wait until Summer and not next week as many were expecting for details of the Government’s new aviation policy – but this mention is encouraging and shows the Government realises its outright ban on new capacity was a mistake.”

Currently, only five European countries levy any form of aviation tax. Of those five, Britain’s is by far the highest. Since APD was introduced here in 1994, annual revenue raised by the tax has increased by 250 per cent. This year alone, £2.6bn of holidaymakers’ and business travellers’ money will go to the Treasury and by 2015, the government has stated it will increase revenue from APD by a further £1.2bn.

The rises in APD come at a time when Emissions Trading Scheme (ETS), an environmental tax on aviation, is being introduced. The government has no plans to offset the revenue raised from the ETS against APD.