Air passenger duty: Review planned to cut APD tax on UK domestic flights

Air Passenger Duty (APD) on UK flights could be halved.

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Air Passenger Duty (APD) is soon to be reviewed and possibly be replaced with a flat £7 rate for all domestic flights. This in effect will see the tax being cut by half.

A government consultation will take place this spring and look at all options, including a new lower rate for domestic flight segments.

The news has been applauded by the airline industry who have been urging the government to reduce this tax which they believe is partly to blame for the demise of regional airline Flybe.

PM Boris Johnson said he wants to reduce air passenger duty on domestic flights to help ‘support connectivity’ across the nation in order for a speedier post-pandemic recovery.  APD is the only tax on air tickets on which no tax or VAT is paid. 

For airlines such as Easyjet and Ryanair who operate a large number of domestic flights, the reduction could prove to be the journey back profit and maybe even lower fares passengers

However, there is an anomaly that will be addressed by this move. APD is currently charged at a minimum of £13 per passenger for flights from a UK airport. That means for a return domestic flight £26 is charged. 

it is “bizarre” that you could pay less tax on a flight from London to Barcelona than a flight from London to Edinburgh

Yet anyone flying out of a UK airport to a destination in Europe will be paying tax on the outward bound flight only meaning it is only paid once when travelling abroad.

According to Grant Shapps Secretary of State for Transport, this is the wrong way round.

Speaking on Sky News, he said it was “bizarre” that he could pay less tax on a flight from London to Barcelona than a flight from London to Edinburgh. 

Airport Operators Association Chief Executive Karen Dee said:

“Domestic aviation suffered a double-hit in the last year, with the collapse of Flybe and the Covid-19 pandemic, and this offers a glimmer of hope for the future.” 

BALPA General Secretary Brian Strutton said:

“We welcome the Government’s announcement of a consultation on reform of domestic APD. It is important that domestic connectivity is reinvigorated post-Covid as this is something which can really help power our economic recovery.

 “The double taxation of domestic flights is an anomaly which is a real barrier to new routes being established and new connections being made between the regions and nations of the UK.”

Not everyone was pleased. Dr Doug Parr, chief scientist for Greenpeace UK said:

While the move is welcomed by the aviation industry, it was slammed by green groups.

“A reduction in APD would continue our nonsensical trend of the higher the carbon, the lower the tax” 

The changes would apply to England and Wales as Scotland and Northern Ireland already have the power to vary APD from their airports.