CWT Cites Rising Costs Of U.K. Air Passenger Duty

When the U.K. government raises air passenger duty on Nov. 1 and again in November 2010, it will cost U.K.-based clients of Carlson Wagonlit Travel an extra 41 percent, the travel management company said this week. The two hikes in the departure tax will add £9 million to the travel expenditure of CWT's U.K. customers, taking their annual APD bill to £31 million.

At present, air passenger duty is charged according to whether the aircraft is flying to a destination inside or outside Europe and also whether the passenger is traveling in economy or a premium class, including premium economy. The criterion regarding European destinations is being replaced on Nov. 1 by four mileage bands.

For flights over 6,000 miles, such as to Kuala Lumpur, a premium cabin passenger will see APD rise from £80 to £110 on Nov. 1 and then to £170 in November 2010. A flight to New York will rise from £80 to £90 and then to £120. APD on flights within Europe will increase from £20 to £22 and then £24. In all cases, the APD for economy passengers is exactly half.

Virgin Atlantic, which flies exclusively long-haul and therefore is hit particularly hard by the duty, said its passengers would pay on average an extra 17.5 percent in APD from Nov. 1, 2009, and 65 percent from November 2010.

Like Virgin, CWT has launched a public campaign against the APD and is encouraging its clients to join. It is particularly unhappy that the U.K. government has positioned the APD as a green tax but is not hypothecating the revenues, currently a little under £2 billion per year, for environmental projects.

"CWT believes the proposed rises will impede economic recovery without delivering environmental benefits and we will oppose them vigorously," said Andrew Waller, executive vice president for CWT UK & Ireland.

Chris Reynolds, chairman of the U.K. and Ireland industry affairs group Institute of Travel & Meetings, said response from buyer members has been muted. "Our members on the whole, while not ecstatic about extra charges, do not see APD as a major threat at this time and are not focused on this area when there are so many issues to deal with," he said. "There are certainly some, however, who are looking at the future cost implications of this tax and questioning whether it has gone too far."