The Chancellor yesterday confirmed that the government will raise Airport Passenger Duty (APD) by 10% from April 2012. The tax will be imposed on every person flying out of the UK, and means that from next year, a family of four travelling economy class to the Caribbean would have to pay a staggering £330 just to leave the country.
ABTA yesterday slammed the ruling, which came on the same day that the UK’s economic growth forecast was cut to just 0.7%.
“At a time when the UK economy needs jobs and growth, hiking taxes on aviation, a catalyst of economic growth, flies in the face of basic economics. This double-inflation increase will damage UK growth and drive down UK air passenger numbers when we need to stimulate the economy,” said ABTA chief executive, Mark Tanzer.
“The Chancellor said today that he wants to support British companies and not tax them out of business or the global economy but his actions on flight taxes do not match his words. The Chancellor’s decision is bad for jobs, bad for growth and bad for passengers,” he added.
Trade body UKinbound also expressed its anger at the decision. “UKinbound is bitterly disappointed with the Chancellor’s decision to increase APD even further and cannot comprehend his failure to acknowledge the damage this will cause to the already decreasing numbers of inbound tourists to the UK,” said UKinbound’s chief executive, Mary Rance.
The UK’s airline leaders also attacked the move. In a joint statement released by pressure group Axe the Tax, representatives from easyJet, IAG, Ryanair and Virgin Atlantic called APD an “own goal”. “APD has no international parallel and has already cost the UK economy 25,000 jobs – that is what the government should focus on… APD’s negative impact on UK GDP significantly outweighs its revenue benefit for the Treasury,” the airlines said.
The 10% APD hike means that, from April 2012, a family of four will need to shell out £53 to travel economy class to Spain. This rate will rise to £264 for a trip to the USA, £330 to the Caribbean and £374 to Australia. These prices will double for premium class travel.
The 10% APD hike will also coincide with the introduction of the EU Emissions Trading Scheme (ETS), which is expected to raise £2bn in taxes each year by 2015-16. ABTA said it will lobby for the cost of ETS to be offset against APD.