Premium class passengers to pay higher Air Passenger Duty to fly out of the UK

The UK Chancellor, Phillip Hammond, disappointed the travel industry by raising Air Passenger Duty in this year's budget announcement.

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It is already the highest air tax in the world yet The UK Chancellor, Phillip Hammond has announced a rise in UK Air Passenger Duty (APD) to be phased in from April 2019.

The Chancellor told the Commons:

From April 2019, I will again freeze short-haul Air Passenger Duty rates and I will also freeze long-haul economy rates. Paid for by an increase on Premium class tickets, and on private jets.

Since it was introduced 22 years ago by the then-Chancellor, Ken Clarke, APD has been increased several times. The current APD rate for short-haul flights has remained at £13 for each flight from a UK airport since 2012. Premium classes pay £26.00.

It will remain at those levels until 2020 at the earliest.

But in April 2018, APD for intercontinental trips will rise by £3 to £78 — or £156 in premium economy, business or first class. And a year later, the premium APD goes up 10 per cent to £172. Private jet passengers, who currently pay £450, will see a rise of 14 per cent to £515 over the next 18 months.

The announcement has not been well-received by the industry. Dale Keller, chief executive of the Board of Airline Representatives in the UK (BAR UK) said:

Whichever way the Chancellor chooses to present it, this is essentially an increase in the world’s highest air passenger tax despite some relief from further increases for economy class passengers.

There is no getting away from the fact that the UK still has double the rates of Germany, the next highest in Europe, and that leaves the UK isolated on its air tax policy as Brexit looms. Only aviation can provide the global connectivity the UK needs to thrive economically and it cannot be right that air passengers remain singled out as the only transport users paying such a tax.

APD is a tax on trade and the Chancellor’s failure to address the fundamental failings of this tax is clearly a major missed opportunity within his Budget for a Brexit-ready Britain.

AIG, the parent company of British Airways, which also includes Iberia of Spain and Aer Lingus, issued its scathing statement:

The Chancellor has said that the Government ‘wants to keep taxes low’ but Air Passenger Duty, which is by far the highest aviation tax in the world, will increase next year by 4 per cent. If this tax continues, the UK will struggle to compete on the global stage, post Brexit.

Airlines UK, representing British carriers, dismissed the APD changes as “sleight of hand”. The body’s chief executive, Tim Alderslade, said that the sharp premium-rate increase “threatens the viability of some long-haul services that rely on non-economy class passengers”.