The U.K. government has postponed until April 2012 any further increases
in its air passenger duty, by far the highest departure tax in the developed
world. The travel industry had lobbied hard for at least a freeze after the
duty, currently as much as £170 for premium passengers on ultra-long haul
flights, in November 2010 rose by as much as 55 percent.
The government had investigated the possibility of switching to a per-plane duty from a per-passenger one, but Chancellor of the Exchequer George Osborne told
the House of Commons that such a charge would be illegal under international
law. As a result, the United Kingdom will seek changes to international law to
make this possible in the future.
Chancellor's decision not to increase APD is a welcome development but does not
go far enough," according to Mike Carrivick, chief executive of the Board
of Airline Representatives in the United Kingdom "The U.K. travel industry
already pays the highest aviation taxes in Europe."
Osborne also announced that an air passenger duty for the first time will
be applied to private jet flights. In a consulting document published Wednesday
immediately after the annual budget was announced, Her Majesty's Treasury said
it provisionally intends to charge a flat duty equivalent to the highest rate
of APD, regardless of distance traveled. The government also is studying
options to reduce the current four distance bands to either two or three, and again
is looking at redesignating premium economy cabins as economy class, which
would halve the APD applied to those tickets. At present, approximately 1.5
million passengers annually fly from the United Kingdom in premium economy, accounting for 1.5 percent of the air
tickets on which the APD is levied.