News

Consultation on Air Passenger Duty planned

10 Mar 2021 by Tom Otley
Belfast City airport

The government today has announced a consultation on Air Passenger Duty in response to Sir Peter Hendy’s Interim Union Connectivity Review. At present, the Duty stands at £13 per passenger departing from a UK airport on a domestic flight. For a long haul flight it will rise to £82 from next month for an economy flight.

The Review, which was created in June, 2020, has been asked by the government to look at:

  • the quality and availability of transport infrastructure within the UK
  • where future investment should be targeted

The final report, which is due this summer “…will consider specific transport projects that could improve connectivity, and will assess their feasibility and potential impact on economic growth, social cohesion and quality of life.”

An Interim report has been published today and identifies as a key concern:

“Better air links to England to and from Northern Ireland and Northern Scotland, including but not exclusively to and from London Heathrow, for worldwide connections for passengers and freight; including the appropriate rate of Air Passenger Duty for journeys not realistic by rail.”

In response, Prime Minister Boris Johnson will today (March 10, 2021) “set out his vision to build back better from coronavirus (COVID-19) by boosting transport connectivity across and between the whole of the UK, as part of ambitions to level up across the country.”

As part of that, the government will also consult on cutting Air Passenger Duty (APD) on internal UK flights and will commit £20 million to develop plans for upgraded rail, road, sea and air links.

The review will also look to the future – considering the role of future technologies, and assessing environmental impacts of current and future infrastructure.

The consultation will include options to change the APD treatment for domestic flights, such as reintroducing a return leg exemption or creation of a new lower domestic rate.

In addition to looking at the case for increasing the number of international distance bands, the government says it “…will continue to decarbonise domestic aviation as part of our ambition to reach net zero, including through mandating the use of sustainable aviation fuels. All domestic aviation emissions are captured in carbon budgets.”

The current rates of PAD are due to rise next month in line with the Retail Price Index.

APD-bands-1

In response to the Interim Report from Si Peter Hendry,  the Airport Operators Association Chief Executive Karen Dee said:

“The recognition of the detrimental impact of Air Passenger Duty and a commitment to review domestic APD to reduce its impact is very welcome. Domestic aviation suffered a double-hit in the last year, with the collapse of Flybe and the COVID-19 pandemic, and this offers a glimmer of hope for the future.

“Sir Peter notes in his review that many of Flybe’s routes were unprofitable prior to the pandemic. With aviation’s recovery expected to stretch beyond 2025, this will put further routes at risk of not returning quickly or at all, not just domestically but also from regional airports to international destinations.

“That is why the Government’s long-promised Aviation Recovery Package must set out an ambitious strategy to return international and domestic connectivity to the UK nations and regions. APD is one of the key levers that the Government has to boost connectivity recovery but APD reform must be part of an holistic approach. This could include measures such as a regional connectivity start-up fund, Public Service Obligation routes, or waiving of airport charges for key routes as is happening in the Republic of Ireland.”

The UK is one of a handful of countries in Europe to charge APD and it is the highest such tax in the developed world, double that of the next highest in the EU, which is charged in Germany.

The British Airline Pilots Association’s General Secretary Brian Strutton said:

“We welcome the Government’s announcement of a consultation on reform of domestic APD. It is important that domestic connectivity is reinvigorated post-Covid as this is something which can really help power our economic recovery. This is especially important given the collapse of Flybe and its extensive UK route network last year.

“The double taxation of domestic flights is an anomaly which is a real barrier to new routes being established and new connections being made between the regions and nations of the UK.”

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