UK Announces Sharp Rise In Air Passenger Duty
Date: 25-Nov-08
Country: UK
From Nov. 1, 2009, air passenger duty (APD) will be based on the distance from London to the capital city of the country where the flight lands, finance minister Alistair Darling said on Monday.
"I have decided to reform APD into a four-band system ensuring those that travel further and have a larger environmental impact meet that cost," Darling told parliament. "This will be effective in reducing emissions from aviation."
APD will be based on four bands set at intervals of 2000 miles from London. From December 2010 when a second rise in APD kicks in, a non-standard class passenger flying more than 6,000 miles will pay 170 pounds (US$254), up from the current 80 pounds.
The current system has two bands, one made up of the European Economic Area, the European Common Aviation Area, countries applying to join the EU, and Switzerland, and a second band covering all other destinations.
Darling's announcement killed off talk that APD might be reformed so that airlines pay per plane rather than per passenger, an idea that had cross-party support in parliament.
"As much as I am in favour of a bipartisan approach, it seems in this case not to have reached the right conclusion," Darling said, adding "This (per-plane) proposal could harm the aviation industry at a time when it is facing huge problems".
British Airways said while it was pleased the government had decided "not to proceed with its aviation duty proposals, we are disappointed that aviation has again been targeted for increased taxation".
BA said there was no environmental justification for doubling APD by 2010 on flights of more than 4,000 miles. "Extra taxation is a further blow to the industry at a time when it is reeling from the combined effects of rising costs and falling demand."
Numis Securities analyst Wyn Ellis said low-cost carriers such as Britain's easyJet and Ireland's Ryanair, both good at filling planes which are newer and thus more fuel-efficient than the industry average, might have preferred a move to a "per plane" system for APD.
From November 2009, the lowest APD -- which will be paid by passengers on budget airlines -- will be 11 pounds (US$16.40) for a flight, up to 2,000 miles, up from 10 pounds now. The charge will be raised to 12 pound in November 2010.
(Reporting by Dan Lalor; Editing by Erica Billingham)