Government finds new way to charge APD

In the wake of the government announcement that Airport Passenger Duty will be charged per flight not per passenger, industry reaction has been mixed.

In its pre-Budget report, the Treasury says from November 1 2009 it will charge APD per aircraft, instead of per passenger.

Federation of Tour Operators director general Andy Cooper said it was too early to assess the full impact of the move, but said charter airlines and low-cost airlines should benefit.

"Charter airlines tend to have higher load factors than regional and scheduled airlines, so in theory this should be a positive move. But, as always, the devil is in the detail, and we need to sit down and look at this more closely." 

In a separate move, the Government has gone some way to resolve an anomoly in APD charges relating to class of travel.

At present, if an airline offers more than one class of travel, only passengers in the lowest class pay a lower rate of APD.

Passengers on airlines with just one class of travel, even on all-business class airlines like Silverjet and Eos, pay the lower rate, while those travelling in Premium Economy on two-cabin charter flights pay the higher rate.

From November 1 2008, the Goverment intends to charge those travelling in all business-class airlines the higher rate, but will still also charge the higher rate to those travelling in Premium Economy on two-class charter flights.

"This is yet another money grabbing measure," added Cooper.

Virgin Atlantic said it was delighted that all-business class airlines have now been included.

But it said it was concerned that there is no indication from the Treasury that the taxation collected will be used for environmental purposes.

A spokesman for Ryanair said: "This is just another tax on ordinary passengers from Government ministers swanning around on private aircraft.

"This Labour Government lied when it proposed to spend the 1bn raised from doubling APD on the environment. Not a penny has been spent on the environment and they are back stealing more from ordinary passengers going on holidays." 

Monarch said it welcomed the decision because it will reward airlines with high load factors and seat density.�

"This is good news for Monarch who reported load factors on scheduled flights of 86.7% in September 2007 – higher than any other UK low fares airline," said a spokesman.

"But we will seek clarification however as to where the collected money will be spent and confirmation that this is not just a stealth tactic to increase the overall level of tax from air travel." 

Flybe chief commercial oficer Mike Rutter said it is crucial the Government does not penalise isolated areas which are dependent on transport.

"He must instead adopt a more tailored approach with the carbon foot print of each aircraft at the front of his mind," he said.

"Communities like the north of Scotland, the south west, Northern Ireland and the Channel Islands rely on smaller aircraft to ensure sufficient frequency of services.

"Any tax that doesn't look at the carbon foot print of aircraft will simply open the door for carriers to create artificial 'we'll pay your tax promotions', designed to unnecessarily fill larger aircraft.

"This will simply serve to increase the negative environmental impact to the climate." 

"Flybe has long been aware of the importance of investment in appropriate aircraft, recently investing $2billion in state of the art planes.

"The crux of the issue here is that all aircraft older than 15 years of age should be banned from the UK. By investing significant amounts in new aircraft, Flybe has seen a 50.44% reduction in our carbon footprint and the Government should focus its attention on airlines flying aircraft that should have been phased out years ago." 

Co-operative Travel MD Mike Greenacre said: "Anything that requires airlines to look closely at their emissions has to be applauded.

"However, the fear is that these airline charges will ultimately find their way to the passenger, potentially resulting in higher prices for our customers." 

12 October 2007