Airlines hit out at increases in UK passenger taxes
BA owner IAG says the move ‘undermined Britain’s global competitiveness’
Airlines have criticised increases in air passenger taxes in the UK after it was announced in the Budget on Monday that the duty would rise in line with inflation from 2020
Airlines have criticised increases in air passenger taxes in the UK after it was announced in the Budget on Monday that the duty would rise in line with inflation from 2020.
IAG, which owns British Airways, said it was “ironic” that the Budget “undermined Britain’s global competitiveness” by raising airport passenger duty (APD).
“Last year, British Airways’ passengers paid £682m in APD. We want to offer more flights to key trading markets, like our European competitors, but APD stifles route development to new emerging markets,” IAG said.
BA flies the busiest long-haul route in the world, between London and
In the World Economic Forum’s 2017 Travel and Tourism Competitiveness Report, the UK came fifth overall but 135th out of 136 for price competitiveness, just ahead of Switzerland.
The Board of Airline Representatives in the UK, which has 70 members, said the increase was “beyond the comprehension of airlines as they seek clarity and confidence in the UK economy”.
It added that Philip Hammond, the UK chancellor, should have promoted long-haul travel to new markets ahead of Brexit.
Mr Hammond said on Monday:
“From April 2020 [air passenger duty] will be indexed in line with inflation, but there will be no change in the duty rate for short-haul flights.”
APD, which is paid by each traveller flying from UK airports to domestic and international destinations, increases by distance and cabin class.
In 2017-18, the tax raised £3.4bn. It will now raise an extra £800m between 2020-21 and 2022-23, according to revised figures from the Office for Budget Responsibility.
At the moment, the rates include £13 for short-haul economy class, £156 for longhaul premium classes and £468 for longhaul private jet flights. It has been frozen for short-haul flights for eight years.
However, the 2020 rise will be much lower than the 2019 rise the chancellor announced in his Budget last year, when he said the long-haul rate for higher cabin classes would increase by £16 to £172 from April 2019 and for those travelling by private jet by £47 to £515 — a rise of about 10 per cent in each case.
Asked if the industry was overreacting, given the new changes were much smaller than last year’s, Victoria Bacon, of the Association of British Travel Agents, said: “We reacted badly last year and if there are increases announced year on year in this way then that has a damaging impact.”
There was some joy for the aviation sector as Mr Hammond announced epassport gates, which allow swifter passage through airports, would be opened up to more countries next year.
At the moment, only passengers from European Economic Area countries — the EU plus Iceland, Liechtenstein and Norway — and Switzerland can use them, but Mr Hammond said travellers from the US, Canada, Australia, New Zealand and Japan would be able to as well.
John Holland-Kaye, chief executive of Heathrow airport, welcomed the move but said: “The government should make this happen before the end of March 2019 to demonstrate that Britain is open for business, as we leave the EU.”
British Airways’ passengers paid £682m in air passenger duty last year, according to the airline’s owner IAG © Bloomberg