Air Passenger Duty
The proposal to replace air passenger duty (APD) with aviation duty has been scrapped. Instead, in order to ensure greater stability and to protect competitiveness at a time of economic uncertainty, the existing APD framework will be amended with four new geographical bands being introduced. The changes will have effect on any travel which commences on or after 1 November 2009, irrespective of when the ticket for travel was booked or purchased:-
|Band and approximate distance in miles from London||In the lowest class of travel (reduced rate)||In other than the lowest class of travel (standard rate)|
|Band A (0-2000)||£11||£12||£22||£24|
|Band B (2001-4000)||£45||£60||£90||£120|
|Band C (4001-6000)||£50||£75||£100||£150|
|Band D (over 6000)||£55||£85||£110||£170|
Existing rates of APD range from £10 to £80 per passenger.
APD is calculated on a per passenger basis, whereas aviation duty would have been based on a per plane basis. The original proposals would have impacted the whole of the aviation sector, particularly the freight industry. The actual changes will only affect passenger travel.
The aviation industry is to be included within the EU Emissions Trading Scheme with effect from 2012.
Impact on freight industry
This is good news for the freight industry which would otherwise have been caught by the previously proposed aviation duty.
Impact on consumers
Unlike the proposed aviation duty, airlines should find it simpler to pass APD straight through to the passenger at point of sale. Whilst airlines can choose whether or not they pass this tax cost on, it is likely that passengers will bear the additional cost.
For example, a passenger travelling economy from London to Tokyo today would pay £40 whereas this time next year this will rise to £50. In 2010 it will be £75. Similarly, anyone travelling in any class other than standard economy will pay £80 today, £100 this time next year and £150 the year after.
Whether or not this will have a positive impact on the environment remains to be seen. It is possible that some passengers will connect to long-haul flights via alternative European hubs, thus minimising their APD rather than reducing their long-haul travel.