Industry responds to Chancellor's APD changes

Posted on 27 October, 2021 by Advance 

The Board of Airline Representatives in the UK (BAR UK) has slated the increase in long-haul Air Passenger Duty (APD) from April 2023 as political posturing that undermines the industry’s net-zero commitments, whilst welcoming the cut for domestic flights.

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The Board of Airline Representatives in the UK (BAR UK) has slated the increase in long-haul Air Passenger Duty (APD) from April 2023 as political posturing that undermines the industry’s net-zero commitments.

Dale Keller, chief executive of BAR UK said: “It is inconceivable that the Chancellor is choosing to suppress his ‘Global Britain’ aspirations and posture ahead of COP26 behind a highly flawed environmental rationale. The British public won’t be fooled into thinking that the Government is investing their APD money to reduce CO2 emissions from air travel. This is another missed opportunity for the UK to lead on overhauling obsolete taxation policies that are undermining the huge investments in technology and infrastructure needed to drive the sustainable recovery of a critical sector of the economy.

"Airlines have committed globally to 2050 net-zero targets that require Governments to develop pragmatic policies and implement tangible interventions - not resort to tinkering with blunt and regressive taxation that fails to meet the expectations of the public or support the sustainability initiatives of the industry."

Commenting on the new domestic rate of APD, Keller said: “We welcome the solution to a longstanding anomaly where return domestic flights have been taxed higher than international flights to Europe but why wait until 2023? This eventual correction should not be regarded as a tax cut but simply the Government finally doing what is fair and right. But the notion that the world’s most heavily taxed long-haul travellers should be expected to subsidise a tax correction for domestic travellers underscores how APD remains not fit for purpose in stimulating a sustainable future for aviation.”

Karen Dee, the Airport Operators Association's Chief Executive said: “We are pleased that the Government has listened and extended for a further six months the Airport and Ground Operations Support Scheme (AGOSS), which will  provide some much needed financial relief for airports in England devasted by the ongoing COVID-19 crisis. However, this will not benefit business/GA airports or be very much help to our largest airports, as it is capped at a level far below their business rates bills.

“The correction to the long-standing taxation of  APD for return leg flights for domestic journeys to a lower rate is very much welcomed and will boost domestic connectivity, particularly for communities with few reasonable alternative transport options and also benefit regional airports. But it is disappointing that Government is delaying these benefits by not implementing the measure until 2023. In addition, cutting domestic APD on the one hand while increasing it on long-haul travel (also from 2023) may make sense on a Treasury spreadsheet but shows a fundamental misunderstanding of how the UK relies on aviation for its prosperity.

“The UK Government’s ambition to create “Global Britain” has seen Ministers invest in improving our trading relationships with key markets across the globe, particularly with Australia and New Zealand. Increasing the tax on the only way to travel to these countries fundamentally undermines that ambition and effort.

“Not only will UK businesses now be penalised for travelling to seek out opportunities and build new trading relationships, there will also be fewer opportunities to get our goods to market. 40% by value of the UK’s non-EU exports travels by air, the majority of which flies in the bellyhold of passenger aircraft. Any increase in APD will affect airline passenger capacity on those routes and therefore also reduce freight capacity.”

Loganair, the UK’s largest regional airline, has welcomed the change in Air Passenger Duty announced by the Chancellor of the Exchequer in today’s Budget – but is calling for the change to be implemented sooner than April 2023. Commenting on the move, Loganair’s Chief Executive Jonathan Hinkles said:

“We’re heartened that the Chancellor has clearly recognised the strategic importance of UK regional air services by reducing APD, and this move is also a vote of confidence in the industry’s extensive efforts to de-carbonise. It never made sense for domestic return flights – including to many outlying parts of the UK – to be taxed at double the rate of return flights to Europe.

“However, having recognised that, this measure could and should be implemented by April 2022 at the very latest, if the full benefit for the UK economy through restoring connectivity after the pandemic is to be realised. Why wait?”

MAG CEO Charlie Cornish said: “Anything that reduces the cost of flying for consumers, at the same time as improving regional connectivity and supporting the Government's levelling-up ambitions is positive news, and so a 50% cut on domestic routes should be welcomed.
“However, it is important to note that the UK has for some time had some of the highest rates of aviation tax in the world, and in the aftermath of these reforms, those travelling on short haul flights will still pay at least £13 and those on long haul flights will still have to pay at least £84.
"These taxes are not only passed directly passed onto passengers, making air travel less affordable for all, they have also placed us at a competitive disadvantage when seeking to secure new connections to key global destinations, which will be more important than ever before, as we emerge from the pandemic and seek to create a global Britain.
"It is vital government carries out a full review of all APD bands and considers creative ways to help UK airports win back routes to key global markets, and secure new connections in the future.

“The introduction of the ultra-long haul APD tax band does not assist the industry in terms of aviation decarbonisation and the revenue generated by the levy delivers no environmental benefit. The aviation sector already has ambitious plans in place, and is working together with the Government on the Jet Zero Council to achieve net zero by 2050, so that people and businesses can continue to enjoy the benefits of international travel without having any further impact on the environment.

“Alongside international co-operation at the upcoming COP26 Summit, the Government should also support key initiatives like CORSIA, Airspace Modernisation and the development of Sustainable Aviation Fuels.”

On the extension of Airport and Ground Operators Support Scheme (AGOSS), Charlie said: “The six-month extension to the Airport and Ground Operators Support Scheme is welcome and will go a small way towards mitigating the devastating impact on the pandemic on our industry. It is disappointing that the £4 million cap per airport remains in place and that the support provided to other sectors continues to exceed that offered to aviation, given its critical role in driving the UK’s economic recovery.
“With so little financial support available to the UK aviation industry, it is vital that the Government creates a framework for international travel free from restrictions as soon as possible.”