U.K. Won't Increase Air Passenger Duty Or Switch To Per-Plane Tax - Business Travel News

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U.K. Won't Increase Air Passenger Duty Or Switch To Per-Plane Tax

March 23, 2011 - 11:40 AM ET

By Amon Cohen

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.

"The 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.

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