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APD for 12+ hour flights to rise to fund domestic cuts – consultation

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The Government published a consultation paper yesterday on reforms to Air Passenger Duty. You can download it from this page of gov.uk.

The level of domestic Air Passenger Duty has become a political issue. When Flybe failed, one reason it gave was that the level of APD – £26 on a return domestic economy flight – was wrecking its economics.

It has also became a football in the UK ‘levelling up’ agenda. With most European countries not having any similar taxes, or not at the same level, it can be cheaper to fly to Munich than Manchester. You would only be paying the £13 economy Air Passenger Duty on the outbound flight rather than on both legs.

Few Governments have ever voluntarily cut stealth taxes, of course. Air Passenger Duty raised £3.6 billion in the 2019/20 tax year, and would have been higher had covid not cut into travel towards the end of the tax year.

As the consultation paper admits, it is also “easy to collect”.

What does the consultation paper suggest?

The Government is suggesting that:

  • domestic Air Passenger Duty be halved
  • Air Passenger Duty be increased on flights over 5,500 miles

There are two proposals for halving domestic APD

For some odd reason, the Government wants to debate two different ways of halving domestic Air Passenger Duty. One is totally stupid and one is blindingly obvious.

The stupid route is to make the return leg of a domestic flight ‘APD free’.

You can instantly see the problem here. If your domestic flight is booked as 2 x one-way flights, the full £26 of Air Passenger Duty will still need to be paid. Only a return booking on a single booking reference would qualify.

Air passenger duty consultation

As the consultation admits, this would require both flights to be taken with the same carrier. It also screws passengers who only require a single trip or are returning by another mode of transport.

Another problem, not mentioned in the consultation, is that this is likely to reduce competition on domestic routes. Because booking return flights with the same carrier will be cheaper than two single tickets with different carriers, it makes sense for routes to become monopolies.

The sensible route, option two in the consultation, is to halve APD for domestic flights to £6.50 each way.

It is hard to believe that there is even going to be a discussion on which option is better.

The only quirk is that APD in Scotland is to be devolved to the Scottish Government, although this will not happen until agreement is reached on the ‘Highlands and Islands Exemption’.

How will APD increase for longer flights?

This is what you currently pay as Air Passenger Duty:

Air Passenger duty bands

As you can see, the cut-off is at 2,000 miles which is approximately a four hour flight. There is no distinction between, say, Tel Aviv and Tokyo.

There are two proposals for change:

  • Revert to the pre-2008 structure of bands at 2,000 miles, 4,000 miles and 6,000 miles
  • Create one additional band at 5,500 miles

The original pre-2008 scheme was scrapped because it created certain disparities. The banding is based on the distance between London and the capital city of the destination country. This meant that the US West Coast was in a low band, because Washington is on the East Coast.

The preferred choice in the consulation is for the 5,500 mile option. This would take in cities such as Tokyo, Cape Town, Mexico City and Bangkok. It would not include the US West Coast, even if the rules were changed to base it on the exact distance rather than the difference between capital cities.

How much would APD be for the 5,500+ mile band?

No indication is given.

How about a frequent flyer levy?

The consultation also suggests launching a frequent flyer lever.

This would require you to submit details of all of your annual flights to the Government. An additional tax bill would be generated based on your annual travel.

The Government is not keen on this option but it is part of the consultation.

What happens next?

The consultation is open until 14th June.

If you wish to make a submission, details are in the paper. You can download the consultation document here.

Comments (127)

  • Dubious says:

    Both proposals seem to be very aviation-limited viewpoints – nothing like more integrated transportation.

    I personally feel the issue shouldn’t be an argument comparing trains versus flights. The real issue is transportation by car. As pointed out by others this is actually some of the cheaper ways of moving oneself around, and yet it is also one of the most polluting on a per person basis. I’d far rather see a Dash-8 aircraft with 40 people on it than 40 separate cars all driving across the UK.

    • Joe says:

      Agreed. But aviation is an easy target. Big nasty fuel guzzling planes – whereas there are other sectors with worst (and more easily fixed) carbon emissions.

    • Andrew says:

      An electric car is the cheapest and least polluting way to get about the country.

      With the 0% BIK, a higher rate tax payer can lease a £65,000 Electric Audi Etron from as little as £330 a month including servicing and insurance. There’s no road fund duty to pay.

      People can charge it for free using their domestic solar panels, or with Octopus energy, on some nights they pay drivers to charge their cars.

      It’s completely baffling the eco-crowd. They’ve spent the best part of their lives changing “car bad”, and now a car that can do 0-60 in 4 seconds is as clean as a bicycle.

      • TGLoyalty says:

        Clean at tailpipe.

        Consider the pollution of the manufacturing process, batteries are very dirty to produce, and the pollution from your energy source, you can choose 100% green at home these days but not aware of any green charger networks, Interested to know if there are any?

      • Ben says:

        @Andrew sadly not. Cars, vans and lorries are still responsible for particles scrubbed off tyres, brake pads and the roads themselves. These pollutants are known as Non-Exhaust Emissions (NEE’s) and are apparently now a bigger source of air pollution than exhaust emissions for the newest fossil-fuel cars. Us “eco-crowd” are sticking with trains and bicycles!

  • Mark says:

    If APD is only charged once on return flights then airlines could create a system to allows passengers to store their APD free return flight and apply it to a future flight booked at a different time. This would still be far more complex than simply charging half the APD.

  • Bob says:

    Is this really to raise revenue or disincentivise air travel as a whole, especially long haul? Would fit nicely with a new green agenda which Covid miraculously kick started with all the stay at home orders. Call me a cynic.

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