U.K. To Raise Air Passenger Duty By Distance, Class

The United Kingdom Treasury Monday said it plans to increase air passenger duty rates by length of haul and class of service on Nov. 1, 2009, instead of its previous per-plane tax proposal.

The United Kingdom said it is moving from two to four "distance bands" in efforts to "improve environmental signals." The new air passenger duties, set to take effect in November 2009, would range from £11 (US$16.68) per way for economy travel of 2,000 miles or less to £110 for traveling more than 6,000 miles in the front of the plane. The Treasury is calling for another increase to those rates in November 2010 of up to £170 for the longest haul in premium classes.

HM Treasury in its Pre-Budget Report, issued this week, said there is a "need to ensure greater stability in tax policy at a time of economic uncertainty, while maintaining its environmental objectives. The government has therefore decided to reform the air passenger duty regime rather than proceed with a per-plane tax."

Aviation organizations are railing against the rate changes, calling them illegal fees masquerading as environmental protections. The International Air Transport Association director general Giovanni Bisignani today called the air passenger duty a "cash grab," adding that it would add millions of pounds to the cost of travel from the United Kingdom and none of the additional revenue through is earmarked for environmental initiatives.

The U.S. Air Transport Association also said it opposes the changes, claiming the move is "counterproductive to the airlines' environmental progress and is in conflict with established law."

"Though the U.K. government asserts that it moderated the amount of the air passenger duty increase in light of the world economic crisis, the increases still are substantial," ATA said in a statement issued Monday. "For example, for a one-way flight to the U.K. from the United States, the per-passenger duty in economy class will increase from £40 per passenger today to £60 by 2010."

ATA CEO James May said the U.K. government should expect legal challenges to the rate change, calling it a "revenue raiser for the government under the guise of environmental protection." ATA said the duty violates several international aviation provisions as laid out by the Convention on International Civil Aviation as well as bilateral air agreements.