Scrap APD? Low level complaining turns into veritable campaign by Big 4 airlines

17 November 2011

take offAir Passenger Duty (APD), has been a grumbling appendix on the digestive system of the Goverrnment for a while. It seems no-one particularly minded it when it was a piddling £5, and up to a maximum of £40, but now that the range of charge goes from £24 to £170, even the airlines have decided to show their disgruntledness. Four airlines from the UK and Irish Republic, Easyjet, Ryanair, Virgin Atlantic and British Airways, are now calling for the UK government to scrap Air Passenger Duty completely.

The tax, which applies to virtually every ticket on a flight originating in the UK, has risen sharply since it was introduced in 1994 and the airlines are claiming it penalises British holidaymakers and makes the UK a less attractive destination. Clearly they are wrong on this last point- APD is not levied on flights into the UK, only on flights out, so it is actually making Britain a far more attractive place to come, but never leave.

The airlines further argue that, as the tax was first introduced to combat greenhouse gas emissions, it should be abolished with the introduction of the EU's Emissions Trading Scheme next year.

Unfortunately the Treasury disagree. A Treasury spokesman said that the government had frozen APD this year (although an increase of about 10% is anticipated next year) and that, unlike many other countries, the UK did not levy VAT on flights. So we should be thankful we are only paying APD. Something Bitterwallet mentioned some time ago. We are so ahead of the game. It is also worth noting that APD is expected to generate £2bn of income this year, so the Government will be loathe to simply give up that much money.

Ryanair chief Michael O'Leary, our favourite airline chief, told the BBC that removing APD would not increase the airlines' profits.

"This has nothing to do with our profits. It is paid by families, paid by passengers going on holidays," he said. "If it is scrapped, the money goes straight back into families' pockets." Oh, how we laughed.

Mr O'Leary also said that 30 million fewer overseas visitors had come to the UK in the past five years owing purely to APD. No statistics were produced to support these figures, but 100% of statistics are true, we can only assume Mr O’Leary is 100% truthful 100% of the time, so it must be right.

Willie Walsh, chief executive of International Airlines Group, which owns of British Airways, called on Chancellor George Osborne to set up an independent review of APD.

"This tax is hugely damaging and must be scrapped," he said."We challenge the chancellor to undertake an independent review, which will show that the net effect of this tax is damaging."

In response, a Treasury spokesman said: "We consulted on a range of reforms to APD, including simplifying the tax and making it fairer by extending APD to private jets.We will say more on this in the coming weeks.”

While a complete scrapping has, perhaps, a snowball’s proverbial chance in the hot place, there may be some room for manoeuvre. Earlier this month the rate of APD was reduced for direct long-haul flights from Northern Ireland, because of competition from services in the Irish Republic, which has an Air Travel Tax of just 3€ to any destination.

Or they could just start charging VAT at 20%. Be careful what you wish for...

TOPICS:   Travel


  • Nick T.
    This story has appeared on the same day as Labour claim the government will over-borrow (is that a word?) another 100 billion, what are the chances of this tax being scrapped? In fact apart from the window tax and the dog licence, has any tax ever been withdrawn?
  • Dick
    As you say, they could charge 20% VAT on flights instead. How does VAT work here? If someone from country X pays VAT on their flights to their government via the airline, then surely at the moment they still pay APD to the UK via the airline. If APD is scrapped and replaced with VAT, then surely the UK government gets nothing from the person coming into the UK flying with their local airline. Whereas we would pay VAT on the flights both in and out of the UK, if the flights are purchased here. And might still end up paying APD if another country charges it. Would this mean people try to buy flights in the country with the lowest VAT rate? > Ryanair chief Michael O’Leary, our favourite airline chief, told the BBC that removing APD would not increase the airlines’ profits. “This has nothing to do with our profits. It is paid by families, paid by passengers going on holidays,” he said. “If it is scrapped, the money goes straight back into families’ pockets.” Oh, how we laughed. That's not quite true, since Ryanair still occasionally does their cheap promos which are tax inclusive. Those 1p / £1 no tax flights are loss leaders where the tax must still be paid. Unless of course they are scrapping those.
  • Dick
    @Nick T - radio licences were scrapped. You can listen to the radio without having a TV licence.
  • Me
    @ Dick I scrapped my own tv licence years ago!
  • Phil
    If the gov want to scrap/reduce any transport tax i'd rather it was on petrol rather than flights because I kinda of need a car to get to work where as to save money on a flight i'd actually need to have the cash to go on holiday in the first place...
  • Alexis
    Yes, presumably airlines pay duty of fuel? Surely they'd be best adding their voice to that current debate. Any savings would be extra profit for them.
  • jt
    Airlines do not pay duty or VAT on fuel.
  • Plant t.
    APD should be on transfer flights too, they pollute just the same as domestic flights. Also the VAT should be chargeable on top, as should fuel duty to bring them in line with our petrol costs. The fact airlines can offer cheap flights at the cost of the environment is a disgrace. They need to pay their fair whack like the rest of us.
  • Simon
    I have never read such drivel as from the last post - let's jut make flying the preserve of the rich again hey??? If you keep adding taxes, sooner I later your total at take will reduce - that time is where we are now

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