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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)

  • Genghis says:

    “Flights to the USA just about scrape past, with London to Los Angeles clocking in at 5,456 miles.”
    But for the whole of the US it’s done on the distance to DC, isn’t it?

    • ChrisC says:

      Yes the current scheme is based on the distance from London to the National capital which makes it simpler to administer.

    • Rhys says:

      Yes, had forgotten. Have added in.

  • ChrisC says:

    Domestics will only get cheaper if the airlines reduce their prices to reflect the reduction. Sure they will change it in the fare breakdown but it’s so easy to add an extra £ 6.50 to the base fare or surcharges so the passenger will likely see no reduction in the overall fare.

    Did Continental reduce the fares from Belfast when APD was removed from long haul departing from Northern Ireland? No they didn’t.

    • TeesTraveller says:

      Well you could say that about a reduction to virtually any government tax that is collected via business.

      But what it will definitely do is make domestic flying more financially attractive to airlines and therefore make some existing and new routes more sustainable.

    • Alex Sm says:

      What is Continental? Sounds like something long gone

  • Super Secret Stuff says:

    Fun fact: San Diego is the longest USA mainland to UK flight I can think of and is even closer to the boundary at 5,478 miles

  • TeesTraveller says:

    It is the region-to-region flying where APD hurts the most as these routes are often using small planes with low passenger numbers and do not get the economies of scale that you get on the London routes. Also, many of these routes such as ABZ-NCL/MME, BHX-EDI/GLA, BRS-EDI/NCL, EXT-MAN and SOU-MAN/NCL are 4 hour plus train journeys.

    As for international APD, I think it should be reformed to a charge related to the CO2 that the scheduled operating plane emits rather than charging the same (with distance bands). Run A350s on LHR-JFK and pay less than a competitor running fuel hungry 747s. This approach to taxation has really worked (a bit too well) for company cars and would reward airlines for using new planes on their UK routes.

    • Rhys says:

      I am actually in the lounge about to fly ABZ-NCL on Eastern myself 🙂

      • TeesTraveller says:

        You should have gone from Teesside. Best airport experience in the country right now (plus Loganair is twice a day to Aberdeen and is cheaper).

    • ChrisC says:

      The issue is that yes you could have a lower tax for planes that produce lower emissions but you can’t force airlines to reduce their prices because of it.

      IIRC LHR landing charges (not the passenger service fee) reflects this (or is that for noise) but I don’t see lower prices when booking those planes.

      • Rhys says:

        I think landing charges are based on weight + noise, but to be honest noise has also come hand in hand with efficiency.

      • Rui N. says:

        Landing charges are based purely on weight. For noise there are bans of some very old models, but that’s it.

        • Rui N. says:

          Well, I’m wrong. Generally they are based on landing weight only, but at LHR they’re also based on noise and NOx emissions.

          • Nick says:

            This just leads to aircraft being shifted round the world. For example LH schedules everything between LHR and FRA on neos – pushing their older A320s to airports without the same restrictions. Doesn’t change behaviour, just leads to scheduling difficulties.

  • Richie says:

    Duty on sparkling wine is being lowered! Something to celebrate.

    • Rhys says:

      So you’ll pay more on your flight to Singapore but at least you can hope that British Airways stocks a higher class of champagne in the lounge 😉

      • Anna says:

        I thought they’d done away with champagne now?

        • Save East Coast Rewards says:

          Stock issues, although there was 🦆 champagne in the F lounge last time I was there. I don’t know if champagne is back in the club lounges now.

        • Andrew says:

          Only in Club lounges – First lounge still serves the real stuff, as does CCR. I think this distinction is good – people with Silver cards need something to aspire to.

    • Dominic says:

      He may as well have said “Tory Christmas party discount!!!!”

  • chris1922 says:

    Need to also ditch higher APD on premium economy fares, and leave it to J and F seats only. Lumping WT+ (etc.) in with them is highly unfair. Premium economy seats are still economy, and not business-lite.

    • Richie says:

      Some levelling needed.

    • ChrisC says:

      The definitions don’t mention specific cabin names but are related to things like seat pitch.

      If premium economy was the same seat as economy but with better food and luggage then it would be in the “reduced” band,

      • Save East Coast Rewards says:

        No it wouldn’t. Club Europe pays the higher rate

        • memesweeper says:

          … but an upfront-seat with all the perks on EasyJ doesn’t. Never understood this.

    • BuildBackBetter says:

      Difficult to define and justify

      • Nick says:

        It’s supposed to be high to ‘punish’ anyone who doesn’t choose the lowest cabin on the flight. For that reason WTP should keep the standard rate.

  • Gareth says:

    Living in the wikds of Cornwall, In investigating this I’ve just found out if first leg is done on a PSO obligation flight then next legs are exempt. Once they announouce who gets PSO from newquay to LHR, will try to fly to LHR and hence save tax on all legs , £400 for 2 of us bussiness to Capetown or Sydney. NB HMRC defines a international connecting flight as anyone that arrives within 24hrs of next flight.

  • Gareth says:

    Truro to London is 5 and a half hours by train so deserves a PSO

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