Tax on f lights could add £50 to family break abroad
THE cost of a foreign family holiday could rise by more than £50 thanks to taxes on fliers being upped in line with inflation.
Chancellor Jeremy Hunt has decided not to intervene to save holidaymakers from double-digit hikes in Air Passenger Duty (APD) in today’s Budget, it is understood.
Government sources last night confirmed that the levy will rise with the RPI rate of inflation, which was more than 11 per cent for most of last year.
It is expected to rise in line with September’s RPI rate, which was 12.6 per cent.
From April 1, APD had been due to be charged at £87 per person per outbound flight in economy class to medium and longer-haul hotspots such as Egypt, Cape Verde and the Caribbean.
But the forthcoming hike means that, pegged to September’s RPI rate, it would rise by more than £10.
For a family of five, this would increase the cost of a foreign holiday by more than £50. For a business-class seat the hike would be more than £20 per flier, or over £100 for a family of five.
For ultra-long-haul destinations, such as Thailand, Australia, New Zealand and Hawaii, APD had been due to be charged at £91 per flier in economy class from
April 1. But this would rise by nearly £11.50 under the scheduled RPI hike. Holidaymakers to short-haul destinations such as Greece, Spain and Italy will see much smaller increases of below £2 per person in economy.
As of April 1 the APD system will be overhauled, replacing the current twoband system with a three-tier scheme based on the distance being flown and amount of carbon emitted.
Those flying up to 2,000 miles (Band A) will pay the least. They currently pay £13.
Those flying between 2,001 and 5,500 miles will pay the second-highest amount, and those travelling more than 5,500 miles will pay the most.
The levy is charged on flights taking off from a UK airport, meaning it is paid on outbound journeys but not inbound.
With the tax usually passed on to customers, airlines complain that the cost of flights departing from any UK airport will be ‘amongst the very highest in the world’. British Airways, Virgin Atlantic, Ryanair and easyJet are among opponents of the APD hike.
They have been urging Mr Hunt to step in and shield fliers from soaring costs due to inflation in the same way the Government did with rail passengers, for whom fare increases were this year capped at 5.9 per cent – well below RPI.
They are frustrated that they face a heavier tax burden while their rivals in America are receiving substantial subsidies under US President Joe Biden’s Inflation Reduction Act. In a joint letter to Mr Hunt, airline bosses wrote: ‘When our competitors are providing such generous support to their aviation sectors, it makes no sense strategically to be increasing costs for UK airlines.
‘We consequently urge the Government to help to reduce the burden both on travellers and the sector and forestall any RPI rises that risk an outsized impact on our aviation sector, the competitiveness of UK airlines and the wider economy.’
‘Makes no strategic sense’