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Published on : Tuesday, November 19, 2013
Air Passenger Duty was introduced in 1994 on outbound flights from the UK, with a £5 rate for UK/EU flights and £10 for everywhere else. Since then it has seen several increases. In 2009 four geographical bands were introduced, based on the distance from London to the capital city of the country flying to (except Russia, which is split east and west of the Ural Mountains).
APD was increased again in 2010, 2012 and 2013. The UK has the highest rate of air tax in the world, some 400% more than most other EU countries. APD will rise again in 2014, taking the highest APD cost for a flight more than 6,000 miles in first class up to £388 (up from £376).
The only APD band which is not increasing is Band A, which covers short flights up to 2,000 miles. This stays between £13 and £52.
Following this increase, which takes effect on all flights from April 1, less than three in ten holidaymakers will consider long-haul holiday destinations due to the increase in long haul APD.
Almost four out of ten (39%) will only consider short-haul holiday destinations. This could have a serious implication to countries in Band B to D, including the popular holiday destinations of the Caribbean islands and the emerging BRIC economies (Brazil, Russia, India, China and South Africa).
Furthermore, a report by campaign group A Fair Tax on Flying claims the government is losing out on £190 million in APD taxes because travellers are flying to airports in mainland Europe before flying on to mid- or long-haul destinations. A Fair Tax on Flying polled 356 people and found 3.6% are taking this approach. If the same percentage of the 98 million people that departed the UK last year did this it would equate to £190 million.
Worryingly for the UK inbound Industry, almost two thirds of the industry’s senior executives fear the APD increase will see fewer tourists come to the UK. Approaching one in two (45%) believe it will have a slight decrease on the number of tourists coming to the UK, while a fifth state it will see ‘significantly fewer’ people visit the UK.
Both Chancellor George Osborne and London Mayor Boris Johnson were in China last month in a bid to attract more business links and tourists from China to the UK. However, APD for Chinese tourists increases to a maximum of £340 per person, which could significantly impact the number of Chinese tourists that visit the UK.
The findings indicate the increase in the tax could jeopardise the successful tourism legacy of the London 2012 Games for the industry.
Source: World Travel Market Industry Report 2013.