Flight tax change boosts families
Holidays will be cheaper for families now that the Government has decided to scrap Air Passenger Duty (APD) for the under 12s.
George Osborne announced on Wednesday that children younger than 12 flying in economy will be exempt from the controversial tax from May 1 next year, and under 16s from 2016.
It means that a family of four flying on a direct flight from Britain will save up to £142 (and even more if they fly indirectly (see table). It also means that families who have bought children’s flights departing from May 1 are entitled to refunds.
“The Government has finally admitted that this tax is unfair,” said Cathal O’Connell, CEO of BMI Regional. “We’re delighted to be able to refund APD payments made by travellers on their family holiday flights for travel from May 1. We believe this will boost outbound tourism and we have set up our call centre to receive customer calls with immediate effect.”
New airfares reflecting the tax change will be published as soon as possible, he said. British Airways also confirmed on Thursday that its prices were being updated.
While the Chancellor stopped short of abolishing APD entirely, the tax break was welcomed by members of the travel industry who have been campaigning against APD since its introduction in 1994.
British travellers are some of the most heavily taxed in the world and many argue that the levy prices ordinary families out of overseas holidays.
“A removal of tax on all flights for children under the age of 12 is in keeping with our aim to fight what we call the Parent Trap,” said Richard Singer, the European MD of Travelzoo.
“This is the combined effect of the government fines for term-time holidays, the highest flight tax in the world and the increase in price of travel during peak dates.”
The company was not alone in claiming it would continue to lobby to get the tax abolished entirely. The Association of British Travel Agents (ABTA) said it will continue to make the case for a much-needed review of the wider tax, “with a view to setting a fairer, more competitive level of APD.”
Business travellers continue to feel they are being unfairly penalised.
“The scrapping of APD on flights for children is to be welcomed,” said Saad Hammad, the chief executive of Flybe. “However, there are not many business travellers under the age of 12 years.”
He pointed out that the brunt of APD is most keenly felt by those on domestic flights. A passenger pays £13 in APD on a return journey from Manchester to Paris or Athens, but from Manchester to Exeter, this doubles to £26 in APD.
“This change is just tinkering at the edges and represents a missed opportunity by the Chancellor to show that he is serious about the economic regeneration of the UK regions,” he said.
The Government also revealed this week that it is considering making it a requirement to display APD calculations so that fares are more transparent.
Mr Osborne reformed the system used to calculate APD in his budget in May, and in doing so admitted that the tax hits exports and puts off tourists.
He amalgamated all longhaul destinations into one band so that holidays in the Caribbean or Australia, for example, will now carry as much tax as those in the United States.
The new bands – one for short-haul destinations of less than 2,000 miles and one for flights further than 2,000 miles - will come into effect in April next year.