Chancellor George Osborne today announced the abolition of Air Passenger Duty bands C and D in his Budget.
The move, which will benefit frequent travellers to Asia Pacific and South America, will see all long-haul flights shift into band B and comes into effect on April 1, 2015.
Currently, APD is calculated according to the distance between London and the destination country’s capital city.
This leaves travellers heading to say, the Caribbean, being charged £330, while those who travel an additional 2,500 miles to Hawaii actually pay less at £270.
Today’s announced change means that all long-haul flights will now carry the same tax as a flight to the US. And private jets will no longer be exempt from the levy.
Virgin Atlantic said in a statement: “A two band APD rate is a very welcome simplification to remove some of the biggest distortions of the current system, which the Chancellor himself admitted is crazy and unjust.
“The Government has rightly recognised the damage APD is having on exporters and the travelling public alike.
“A tax system which penalised high growth emerging economies such as China and India was always contrary to the Government’s stated policy on trade and exports, so this is a positive step that recognises the impact of this economically damaging tax.
“There is a growing body of evidence demonstrating the huge economic benefits to the UK of reducing or abolishing APD and we hope that the Government will continue to go further in the long run.”
Dale Keller, chief executive of the Board of Airline Representatives in the UK, said: “The Government has finally acknowledged what the industry and business knew all along – that the highest rates of aviation tax in the world were a brake on driving the UK’s economic growth with emerging markets.
“Of course we would like the Chancellor to go further still on reducing APD but this is a step in the right direction and BAR UK will continue its engagement with the Government to deliver the fair and proportionate aviation tax that the UK deserves.”
Business Traveller subscribers can read a feature on the 20th anniversary of APD from our February issue here.