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Air Passenger Duty shaken up in the Budget – are you a winner or a loser?

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Rishi Sunak, the chancellor, has just announced that Air Passenger Duty will rise even further for the longest international flights as he unveils the annual budget for the country. It isn’t all bad news though.

In case you weren’t already aware, Air Passenger Duty is already the world’s highest tax on flights, adding between £13 and £180 when departing the UK, depending on the distance and class of travel. The tax only applies to U.K. departures which, for domestic flights, means you are paying APD twice.

The top rate from 1st April 2023 will be £200.

uk budget air passenger duty changes

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.

What are the current charges?

Whilst APD, which was introduced in 1994, was originally marketed as a green tax that would reduce carbon dioxide emissions, in reality it has just lined the treasury’s coffers. The money raised from APD is not ring-fenced on spending to reduce aviation CO2 emissions or otherwise make flying more eco-friendly.

The treasury even admitted this in a 2011 consultation:

“Air passenger duty is primarily a revenue raising duty which makes an important contribution to the public finances, whilst also giving rise to secondary environmental benefits.”

Air Passenger Duty, as well as Heathrow’s high Passenger Service charges, make the UK one of the most expensive places to fly from. It is one of the reasons we often recommend flying from Inverness, which is free of APD, or Europe first.

The current rates, which came in on 1st April 2021, are as follows:

Air Passenger Duty Cheapest cabinOther cabins
Band A (0 – 2,000 miles)£13£26
Band B (Over 2,000 miles)£82£180

From 1st April 2022 it will increase, as announced in the last budget, to:

Air Passenger Duty Cheapest cabinOther cabins
Band A (0 – 2,000 miles)£13£26
Band B (Over 2,000 miles)£84£185

Today’s announcement covered the increase from 1st April 2023.

APD rates are set to increase – or decrease – or stay the same ….

A rise in APD has been mooted for some time. A consultation earlier this year suggested that the government was looking at increasing APD for longer flights in order to fund a reduction in APD for domestic flying.

Today’s Budget makes it clear that this will be implemented, with the new rates taking effect on 1st April 2023.

Here are the new Air Passenger Duty rates:

New Air Passenger Duty rates

Domestic flights will get cheaper

Let’s start with the good news. Domestic flights between England, Scotland, Wales and Northern Ireland will be subject to lower taxes.

These flights will have their APD cut in half, which essentially means the previous ‘doubling up’ of APD has been eliminated. You will now pay £13 in Air Passenger Duty on a return flight, or £6.50 one-way.

It is not clear if the Channel Islands and Isle of Man are included in the definition of ‘domestic’. I am assuming not, because the chart above says it covers only the ‘UK’.

Ultra long-haul flights will get more expensive

To compensate for the domestic cut a new ultra long-haul band is being introduced for flights over 5,500 miles.

That includes flights to Southern Africa, parts of South America (although not Brazil), the Far East and Australia Pacific regions. Flights to the USA, the Middle East and the majority of Africa are unaffected.

Here is a map from the government consulation. The new ultra long-haul band is in red:

UK apd bands

(APD bands are calculated from London to the national capital. That’s unfortunate for Mexico ….)

Economy passengers will pay an APD rate of £91 on these flights which is just £4 higher than a standard long-haul flight from the same date.

Passengers in other classes will pay £200. This is just £9 higher than the 2023 standard long-haul rate, which makes you wonder why the Government bothered. The extra money raised will be minimal.

The new APD rates are actually worse for the environment

Somewhat ironically, the new rates will actually be worse for the environment, despite APD being sold as having green credentials.

By reducing domestic APD, the government is actually incentivising domestic air travel over other, more environmentally friendly forms of transport. Taking a flight from (for example) London to Edinburgh will now be cheaper, and more competitive, than taking the train.

Of course, there are many domestic routes where no decent public transport links exist. On these routes a reduction in taxes will be welcomed by those who have to make those journeys on a regular basis and don’t have decent alternatives.

These are few and far between, however – the vast majority of domestic seats are available on trunk routes such as those between London and Edinburgh, and according to Cirium over 40% of UK domestic flights are to or from London airports. The proportion of region-to-region flying is much smaller.

Conclusion

With a new top-rate which will be only marginally higher than the standard long-haul rate, most HfP readers are likely to come out ahead. The saving on one domestic return flight each year will be higher than the extra cost of one trip to Asia or Latin America.

Remember that these changes do not come into effect until 1st April 2023. This is 18 months away.

Comments (172)

  • E says:

    I don’t understand why they aren’t targeting the cruise industry’s carbon footprint. This is worse than flying. There’s been lots of analysis done showing that a cruise ship emits more carbon per passenger mile (measurements split down so it’s per person, not a measurement for all passengers on the ship) than passenger airlines emit per passenger mile (again measurement is per individual passenger). It appears to be more environmentally friendly to fly to New York for example than to go there by cruise ship. Yet the focus is always on taxing flying not cruising. I think lots of people who cruise or travel by ship instead of by plane feel they are being more environmentally friendly and it’s not really the case.

    • Rui N. says:

      Because plenty more people travel by air than by cruise ship. On a per-mile basis, long haul aviation is actually very green. The trouble is that a long-haul roundtrip is more miles than a lot of people travel over land a year.

    • Peter K says:

      But is a cruise less environmentally friendly than a flight and then hotel at the end?
      The cruise part saves on the lighting/heating/washing linen etc at a hotel. (PS I’ve never been on a cruise so have no axe to grind)

      • Rui N. says:

        Cruises are pretty bad, so I’d imagine yes, that they lose in almost all comparisons. Mostly because cruise ships, like all oceangoing ships, burn the dirtiest fuel that no one else wants. CO2 is the minor of their problems, local air pollution is much big of a problem.
        If cruise ships change to natural gas (like some apparently are planning on doing), then the conversation will change completely, because they’ll be much much cleaner than they are today.

        • Dubious says:

          True, although IMO have at least made some ‘recent’ attempts to make it slightly less dirty…

          https://www.imo.org/en/MediaCentre/HotTopics/Pages/Sulphur-2020.aspx

          • Rui N. says:

            Yes, they did. And since sulphur oxide has a “climate cooling” effect, these new rules actually increased the climate change impact of shipping 🙂 (which is fine, it was much more important to act on the local air pollution issues caused by sulphur oxide)

          • Mikeact says:

            We’re on Brittany Ferries next week, to Northern Spain. I understand that it’s costing them a fortune to change to a cleaner fuel.

      • E says:

        Wouldn’t you be using lighting/heating/washing linen, etc at home so that’s in part just moving the location of what you’d do anyway? I know a hotel might change your sheets more often than you do at home but I’m not sure how much that aspect contributes. Interesting point though.

      • Dubious says:

        But a cruise ships also burns fuel to move the [lightbulbs and wiring / heating appliances and cabling / linen, washing equipment and water / as well as the all fuel needed to power these things] around the oceans in conjunction with the passengers.

  • Gavin says:

    Spotted a HfP commenter on the Guardian website today giving their view on the budget

  • Muzer says:

    Glad you brought up the environmental concern. I think it’s utterly ridiculous that there’s this cut in air passenger duty, when airlines already have tax-free jet fuel, and a fuel duty freeze for yet another year for car drivers; whereas the railway pays tax on its fuel, and fares have been going up by above inflation for years.

    We need a huge reduction in rail fares to encourage environmentally friendly long-distance travel, not a reduction in air passenger duty…

    • Dubious says:

      I thought the rail fares started going up as a consequence of the government funded subsidies being gradually reduced, starting over ten years ago? The argument being that the subsidy mostly benefited a relatively small slice of the population (rail commuters).

      However that was before the GBR management contract approach came along.

    • MKB says:

      I see little to encourage rail travel and much to discourage it.

      The rail fares I pay on Avanti have gone up by typically 50%-100% since they took over from Virgin and I am now travelling largely standard class for more than I used to pay to travel first class.

      Avanti have achieved this by:
      – Abolishing the half-Saver (SVR) fare (so you can no longer mix-and-match flexible one way with fixed another, and you can no longer benefit from railcard reduction when one leg is after 09:30 and another is before);
      – Allocating inventory to Advance fares in only the top fare buckets, if at all;
      – Introducing new Single fares at 75% of the cost of a return;
      – Restricting first-class to coach K and two rows of coach J to reduce supply;
      – Abolishing Weekend First upgrades and replacing with Standard Premium Upgrades (i.e. no catering);
      – Hugely increasing the cost of first-class upgrades via SeatFrog.

      They have also gutted the Traveller programme, by not allowing complimentary weekend journeys to be researched or booked online, and by closing it to new members. Many members were unable to renew because of lockdown travel restrictions, and given no opportunity to re-qualify once travel re-opened.

      For some time, Avanti have had an ongoing system-wide issue with being unable to download seat reservations.

      I used to travel nearly everywhere in mainland UK by rail. For most journeys, I’m now driving instead either due to excessive fares (even with extensive use of split ticketing) and reduced schedules.

      • Ian says:

        I don’t understand your comment that Avanti has reduced first class capacity to just Coach K and two rows of Coach J. I was on an Avanti service in first class to Glasgow last week and the first class coaches were exactly the same as they have been for years.

        • MKB says:

          Avanti may be retaining some flexibility to adjust the dividing point, but on most services the remainder of J plus H, plus G (on an 11-car Pendo), are now Standard Premium, despite the coaches themselves still saying “First”. The seats should have correctly labelled antimacassars. Standard Premium is the same seats without the catering.

          I gather the reason some of J is included is to ensure there is still a wheelchair position in first class.

  • Dave says:

    We set our own taxes and APD in IOM, usually based on UK approach. IOM government are currently reviewing this.

  • Youllnever says:

    Loser here. Mostly fly to HKG. If the banding was 6000+ as initially rumored, I would have just slipped under it 😑

    • iceman says:

      fight witth HMRC. capital city of hong kong is peking. if they calculate it seperately it would be acknowledging hong kong as a country – in such case they should change all their IT framework to reflect this!

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