Air Passenger Duty (APD) is a tax on flights leaving from the UK. APD was introduced in 1994 with a £5 rate for the UK/EU flights and £10 elsewhere. Since then, it's seen several increases and a doubling for passengers travelling other than economy class. The rate is based on the distance from London to the capital city of the country being travelled to.
In the March 2012 budget:
- As confirmed in the 2011 Autumn Statement, APD rates increased by double inflation from 1 April 2012 and will further increase from 1 April 2013;
- APD will be extended to business jets effective from 1 April 2013;
- The Office of Budget Responsibility forecasts APD receipts at £3.9 billion by 2016-17.
The Association of British Travel Agents (ABTA) accepts that aviation should pay its proper environmental cost but believes that the current and future APD levels yield far more tax than is justified by environmental concerns.
ABTA has expressed great concern that the APD bands based on the distance from London to the capital city are illogical from an environmental perspective and would put travellers off destinations such as the Caribbean and Kenya, where economies are extremely dependent upon tourism. APD also has an impact upon incoming visitors to the UK, which might make them go elsewhere and not visit the UK at all.
ABTA also believes that travellers flying from the UK should not be penalised by a form of double taxation. Tax rises are socially regressive and will impact most upon those who can least afford it and lead to families being priced out of taking flights. This is especially acute for lower socio-economic groups and ethnic minorities visiting friends and relatives abroad. ABTA believes that APD should be replaced with a per plane duty (PPD) - a fair tax based on efficiency of aircraft and more closely aligned to the distance travelled.
In reality APD is starting to have a real effect on how much you pay to fly. This year it has risen from £12 to £13 per passenger for short-haul flights, but if you're travelling long haul from the UK (more than 4,000 miles) you'll pay £92 instead of £85. That's £28 extra for a family of four. By 2016, plans for increases could see a family of four paying £500 in tax to fly long haul in economy class.
Research from Sainsbury's Finance shows that a passenger flying economy from London to Sydney, could pay over £190 more in taxes and fees, than those travelling from Amsterdam to Sydney, making it over £554 compared to £362 from Amsterdam.
London passengers flying economy to Cape Town would typically pay £460 in taxes and fees, much more than the £347 for passengers from Rome, £326 from Amsterdam or £318 from Paris.
The research findings also indicate that in an effort to reduce their APD bill or avoid it altogether, more than 7.5 million (16%) Brits would go to a short haul holiday destination rather than long haul and over 6.6 million (14%) Britons would book a short haul flight to a non-UK airport, have a stopover and then take a separate, long-haul flight from there.
Sources: www.abta.com; www.sainsburysbank.co.uk