Reform of Air Passenger Duty helps long-haul tourists

Chancellor of the Exchequer George Osborne outside 11 Downing Street

UK passengers on long-haul flights will benefit from an overhaul of the Air Passenger Duty (APD) airport departure tax.

Announcing changes in Wednesday’s Budget, Chancellor George Osborne admitted that the current system was “crazy and unjust” in that Britons travelling on, say, eight-hour flights to Barbados pay more APD than those on 11-hour flights to California.

But Mr Osborne said that he was scrapping the two highest of the four APD tax bands so that those on long-haul flights pay only as much as they do now travelling to the USA. Travellers to south east Asia, Australia and New  Zealand, and to Kenya and South Africa will also pay less duty.

A Virgin Atlantic spokeswoman said: “A two-band APD rate is a very welcome simplification to remove some of the biggest distortions of the current system, which the Chancellor himself admitted is crazy and unjust.

“A tax system which  penalised high growth  emerging economies such as China and India was always contrary to the Government’s stated policy on trade and  exports, so this is a positive step that recognises the  impact of this economically damaging tax.

“There is a growing body of evidence demonstrating the huge economic benefits to the UK of reducing or abolishing APD and we hope that the Government will continue to go further in the long run.”

But a British Airways spokeswoman said: “This is window dressing a tax that even George Osborne says is ‘crazy’.

“It still punishes families and costs UK jobs.

“The only long-term  solution is to scrap APD in its entirety and allow the  aviation and tourism  industries to flourish, to the benefit of the wider UK  economy.

“APD remains the highest aviation tax levied in the world.”

From April of 2015, APD will be simplified into a two band system: Band A for short haul flights of less than 2,000 miles from London and Band B for all long haul flights more than 2,000 miles from London.

The new Band B will be charged at the planned rate in 2015-16 (£71 for reduced rate (economy) passengers and £142 for standard rate passengers).

The Caribbean Tourism Organisation’s Beverly  Nicholson-Doty said: “This is a complete victory for the Caribbean has been  lobbying against the unfair system which charged a higher rate of APD on flights to  Barbados than Hawaii and placed the United States at a competitive advantage.”