Flights ‘stealth tax’ will hit seats in economy too
FLIERS face a doubledigit ‘stealth tax’ hike on flights as the Treasury looks to nearly double the amount it rakes in from travellers and holidaymakers.
Chancellor Jeremy Hunt announced yesterday that air passenger duty will be hiked from April on premium economy and business class fliers.
It will be frozen for those flying economy on domestic and short-haul flights, which applies to most of Europe.
But in the small print of yesterday’s Budget, the Treasury outlined plans to increase APD in line with the RPI rate of inflation for all economy passengers from April 2025.
At this point, APD on premium economy and business class seats may rise even higher than RPI and be ‘further adjusted for recent high inflation to help maintain their real-terms value’.
It raises the prospect of the APD hike on these seats reaching double digits. RPI was 5 per cent in January this year and hit a high of 14.2 per cent in October 2022.
The Office for Budget Responsibility watchdog, which published its own forecast alongside yesterday’s Budget, said it expects APD receipts to hit nearly £6billion in 2028/29 financial year, up from £3.3billion in 2022/23.
Tim Alderslade, CEO of Airlines UK, the industry body representing UK-registered carriers such as British Airways and Virgin Atlantic, said: ‘ The decision to increase APD goes against the Prime Minister’s commitment not to discourage flying through taxation.
‘Hitting passengers – including families and those travelling for leisure – with stealthy tax rises will only make the UK even less competitive on the global stage, with aviation taxes and airport charges already amongst the highest in the world.’ Clive Wratten, chief executive of the Business Travel Association, said: ‘This tax will hinder growth for small and medium enterprises through limiting international collaboration opportunities.
‘It will hit charities, academics and researchers alongside businesses of all sizes combating rising costs in every area.
‘There is no mechanism for ensuring that the monies from this tax will go into innovation in the airline sector nor into sustainable aviation fuels. This is therefore just another tax on British businesses.’
Former British Airways boss Willie Walsh said: ‘This damages business connectivity at a time when post-Brexit Britain is in desperate need of foreign investment and better trade links.’
The APD regime was overhauled last April, replacing the former two-band system with a three-tier scheme based on the distance being flown and amount of carbon emitted.
Those flying abroad up to 2,000 miles pay £13 in economy or £26 in business class.
For journeys up to 5,500 miles the charges are £87 and £191 respectively and for longhaul the levy is £91 and £200.
The levy is charged on flights taking off from a UK airport, meaning it is paid on outbound journeys but not inbound. It is usually passed on to customers in higher air fares.
The Budget said: ‘The 202526 APD rates for economy passengers will increase in line with forecast RPI, rounded to the nearest pound.’
‘It will hit charities’