Air Passenger Duty scrapped for children …. but with small print

George Osborne caught me by surprise yesterday by announcing changes to Air Passenger Duty (again).  Perhaps his hand was forced by the recent announcement from the Scottish Executive that they will move to abolish it north of the border as soon as the respective powers are devolved.

The headline details are:

These changes apply to ECONOMY tickets only

Children under 12 ON THE DATE OF TRAVEL pay no APD from 1 May 2015

Children under 16 ON THE DATE OF TRAVEL pay no APD from 1 March 2016

The higher bands of Air Passenger Duty were already heading for the scrapheap from 1 April 2015.  From that date the current four bands will be reduced to two, ie:

0 – 2000 miles:  £13 economy, £26 all other classes

2000+ miles:  £71 economy, £142 all other classes

A family of four will save £142 on a long-haul economy flight from 1 May 2015 as long as both children are under 12.

Autumn Statement

Anyone who has already booked a ticket for travel after 1st May will be due a refund from their airline.  Most have already said publicly that they will comply.

It will no doubt take the airlines some time to adopt their systems to price tickets correctly.  This new system is unnecessarily complex in my view and may require substantial rewriting of the global booking systems.  He is effectively forcing every airline in the world which flies to the UK to rewrite their website overnight.

The Autumn Statement summary document is here.  The paragraph you want is 2.114 although that tells you next to nothing and does not even mention that it is restricted to economy flights.

Paragraph 2.115 is also interesting:  “Air Passenger Duty transparency – The government has reviewed how to improve tax transparency in ticket prices and will consult on an amendment to the Air Services (Pricing) Regulations to require the display of APD.”  I honestly have no idea what they are getting at here as airlines are already obliged to show tax-inclusive prices.

Overall this is clearly good news for almost all travellers – ironically I am in the 0.001% who will not benefit (much) as I always manage to snag long-haul redemptions in premium cabins for our brood!  I do appreciate how much this will benefit others though.

One immediate question is whether this puts World Traveller Plus under threat.  Since WTP is treated as a ‘premium cabin’ there will now be a £142 tax gap for a child when comparing World Traveller and World Traveller Plus which will increase the headline price differential. Fewer family groups may now decide to upgrade and that may mean that WTP loads take a hit.

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Comments

  1. Oliver Bennett says:

    Rewrite website?

    If age > 12
    APD = yes
    Else
    APD = no

  2. Does this put WT+ under threat? I find it incredibly hard to believe it does.

    • During school holidays I certainly think it will have an effect on WT+ as the difference in tax for this ‘premium’ cabin isn’t insignificant.

      I know I doubt I will go to WT+ with my daughter.

  3. Will have very limited impact on me as either I book premium redemptions or fly ex EU.
    The change was also accompanied by a call for airlines to clearly display fuel surcharges and to pass on the benefits of a drop in fuel prices.
    As this charge is now more than double any APD charge that is where passengers will get real benefits if it were actioned. In reality fares will be adjusted or the charges converted to some other spurious charge and beyond the refunds due on iany tickets purchased, passengers, I fear , will see no real benefit to this change

  4. Excellent more money for diapers for to use on my 3 week old daughter.

  5. Is the reference to the Air Sevicing Pricing Regulations an attempt to stop airlines lumping APD and fuel surcharges together as “taxes” to disguise the amount of surcharge.

    • I suspect that it’s both an attempt to stop airlines bundling “taxes and charges” which result in passengers blaming the government for the price of their tickets … And an attempt to crack down on airlines not refunding “charges / levies”.

  6. If this causes a drop in paid flights in WT+ will there be an increase in redemption opportunities?

  7. Minor point – Scottish Executive no longer exists – us patriotic Scots officially renamed it the “Scottish Government” when the nationalists stormed to power many years ago:)

    • Since we’re into minor points – us patriotic Scots couldn’t officially rename it, because the name of the entity wasn’t a devolved matter! The original minority SNP administration just started calling it the “Scottish Government” anyway, leading to much hilarity at FMQs when Labour MSPs pointedly asked what the Executive was doing and Alex Salmond equally pointedly replied on behalf of the Government.

      But that was then. The name *was* officially changed by Westminster at some point after that – I don’t remember when, but comparatively recently.

  8. Can we expect to see a reduction in RFS redemption fees for children on BA, then? While I appreciate the cash component doesn’t cover BA’s standard fees and charges per se, there’s clearly now a differential between the cost to BA of flying an adult and a child (if I understand correctly).

    • Exactly my thoughts. Since we already pay more for children on a redemption than we should (considering child cash fares are cheaper than adult ones), this is more amo that their charges should drop. and if/when adult APD drops, think RFS fees will also drop? Mmm, as mentioned above, the benefits will most likely only be for those that receive a refund on flights already booked and in reality passengers will see little difference in future fare quotes and savings.

      • True. Raises the question of whether you could claim a refund on your child’s RFS booking on the basis that BA are now having to pay over less APD to HM Treasury than they had expected when selling the ticket.

        • For a one way LGW to Europe on BA the child ‘extras’ are £34.50 – £13 APD, £9.50 BA YQ and £12 for Gatwick coffers. Following the APD cut the ‘extras’ will still be £4 MORE than the RFS fee. So I suspect BA will pocket the extra.

          Even more so at LHR where the pax fee is an outrageous £34 for children and even infants.

          Britain is one of very few places where infants pay adult rates of airport fees.

  9. Why age 16? Is this another repercussion of the referendum?

    • Why is it 1st May 2015 for under 12s?
      Why is it 1st March 2016 for under 16s?
      Why is it 1st April 2015 for merging long haul APD bands?

      The cynic in me thinks those 3 separate dates are recommended by the expensive team who will implement the changes on behalf of HMRC!

  10. So have I understood that anyone regardless of age with flights hooked for after 1st may 2015 are due a refund or just kids? As I have 2 club world tickets booked for may 2015 for me and my mrs and any refunds would be good haha

    • Just kids, and just economy, so you lose both ways!

    • APD for adults is reduced for flights to countries where the capital is over 4000 miles from London, from April 2015. However, this change was already known when you booked your tickets, and so you would have been charged the correct rate.

  11. James Hunt-Davies says:

    Does anyone think this will apply to package holidays (eg: Thomson) already booked and due a refund?

    • You’ll need to read the small print; it sometimes contains clauses such as if the total amount payable drops or increases by 2%, they will not refund or charge extra. But you could always just ask them or maybe wait a few days for them to formulate a policy (and see if anyone else has any luck)

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  1. […] UK is eliminating the ‘Air Passenger Duty’ for children under 12 flying economy starting in March, then children under 16 starting in 2016. This applies to economy only right away […]