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Air Passenger Duty Raised

Duty raised at least 10% and doubled in some cases

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The tax for flying out of British airports is to be raised by at least 10 percent and will double in some cases by 2010, the government said, giving its green credentials a boost and handing the Treasury much-needed income.

From November 1, 2009, air passenger duty (APD) will be based on the distance from London to the capital city of the country where the flight lands, finance minister Alastair Darling said on Monday.

"I have decided to reform APD into a four-band system ensuring those that travel further and have a larger environmental impact meet that cost," Darling told parliament. "This will be effective in reducing emissions from aviation."

APD will be based on four bands set at intervals of 2000 miles from London. From December 2010 when a second rise in APD kicks in, a non-standard class passenger flying more than 6,000 miles will pay GBP170 pounds (USD$254), up from the current GBP80.

The current system has two bands, one made up of the European Economic Area, the European Common Aviation Area, countries applying to join the EU, and Switzerland, and a second band covering all other destinations.

Darling's announcement killed off talk that APD might be reformed so that airlines pay per plane rather than per passenger, an idea that had cross-party support in parliament.

"As much as I am in favour of a bipartisan approach, it seems in this case not to have reached the right conclusion," Darling said, adding "This (per-plane) proposal could harm the aviation industry at a time when it is facing huge problems".

British Airways said while it was pleased the government had decided "not to proceed with its aviation duty proposals, we are disappointed that aviation has again been targeted for increased taxation".

BA said there was no environmental justification for doubling APD by 2010 on flights of more than 4,000 miles. "Extra taxation is a further blow to the industry at a time when it is reeling from the combined effects of rising costs and falling demand."

Numis Securities analyst Wyn Ellis said low-cost carriers such as Britain's easyJet and Ireland's Ryanair, both good at filling planes which are newer and thus more fuel-efficient than the industry average, might have preferred a move to a "per plane" system for APD.

From November 2009, the lowest APD -- which will be paid by passengers on budget airlines -- will be GBP11 (USD$16.40) for a flight up to 2,000 miles, up from GBP10 now. The charge will be raised to GBP12 in November 2010.

(Reuters)

26 November 2008

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