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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)

  • RTS says:

    EX-EU flights makes even more sense now…

    • ChrisC says:

      Only if the saving is more than the cost of your positioning flights to get to said airport.

      • Qrfan says:

        I have never taken an exEU flight that wasn’t at least 50% cheaper than ex London equivalent. I’ve saved at least £1k every time, on at least half a dozen separate trips. APD is mostly irrelevant – you’re playing air fare arbitrage, not tax arbitrage.

      • Paul says:

        No one does ex EU to save APD! They do it to save £000,s of pounds on J and F fares on what they would have paid had they flown from the UK. The APD is a tiny fraction of this.

        My family has saved as much as £10K by flying ex EU.

        It is a testament to how well BA and others have managed to bundle their fees, airport fees and APD into a catch all Taxes bracket, yet APD makes up probably less than half of the costs BA and the airports impose.

        In any event in this levelled up economy with its high wage high skilled workforce, isn’t everyone able to fly First Class?

        • Yan says:

          Plenty of people do ex-EU to save APD on F/J award redemptions

          • Mikeact says:

            I’m just one of them as I’ve said before.

          • John says:

            Hard to justify if it was just the APD – usually you also save a significant amount of spurious surcharges on redemptions

        • Babyg says:

          the APD is part of the equation.. so i would say people do….

          • David says:

            I fly ex EU because LBA has direct flights to AMS and DUB and not LHR.

          • kk says:

            i dont think saving on just apd for awards is worth ex eu…. noting u hv to redeem at least 3 more flights to cover the apd savings.

            revenue OTOH…

    • J says:

      Now we’re consigned to the much longer “all passports” queue I’m not sure I’d agree. I waited over an hour last night in Berlin while there was no queue for EU passengers…

      • Paul says:

        Its what people voted for and they knew what they were voting for!

        Waited 30 minutes at 12 noon today in T2. At one stage not a single E gate in use. And it seems that gates are open to almost anyone wheel we are condemned to the alien and third country queues elsewhere.

        But at least Priti Patel will be happy to know that her hostile environment really does mean I hate coming back.

        • BuildBackBetter says:

          Exactly. All the low wage workers getting a hike since brexit should sacrifice their income so that Paul can clear immigration quickly.

    • Andrew says:

      Or the ME3 to Asia presumably? If you say fly with QR from LHR to DOH and then on to BKK on one ticket – would you pay the higher or the lower?

      • Nick says:

        Higher. Connecting tickets attract the rate for the full journey being made.

    • Gareth says:

      It can’t be a connecting flight or you get charged for whole journey. Two separate sets of tickets and need to leave enough time to get luggage and then check in again.

  • Dominic says:

    I’m a loser.

    There, I said it.

  • Save East Coast Rewards says:

    “Taking a flight from (for example) London to Edinburgh will now be cheaper, and more competitive, with taking the train”

    Excluding Avios redemptions (which I often use to travel cheaper than the train at short notice) I think like for like the train will still be mostly cheaper unless your time is no value and you’re happy to go out of the way to Luton or Stansted (and then a lot of, or even all, the saving will be eaten up by actually getting to the airport). Those who value convenience and fly to a major airport are likely paying more than the train.

    But forgetting London to Scotland, the routes the likes of Flybe used to do and Loganair, Eastern, etc are doing are routes where there’s no viable train service making these routes viable is a good thing for UK connectivity.

    • TeesTraveller says:

      Spot on!

    • BuildBackBetter says:

      I know many families who have never taken the domestic train, except for commuting. It’s always the car.
      Car travel is bloody cheap and super convenient, especially for families with kids.

    • John says:

      Well if Lumo continues to offer £19.90 KGX-EDB it would be cheaper, but for me, it’s faster and cheaper to get to Heathrow than Kings Cross, and I get free food. At the Edinburgh end it depends where I want to be – since the tram is a ripoff

  • happeemonkee says:

    Is there a chat thread for today? Can’t find it!

  • Richie says:

    More BACF domestics from LCY please.

  • Phil W says:

    They should have scrapped APD on all domestic flights that do not involve a LON airport if they were really interested in regional economic development. It is absolutely crazy that a train from Edinburgh to London is often cheaper than from Edinburgh to Derby. Domestic regional train routes need greater competition and flying for some is the only credible alternative.

    • tony says:

      Cue Southend dropping “London” from its name, STN becoming “Cambridge South” and Gatwick rebranding as “Crawley International”

    • David says:

      There is no realistic alternative to a “domestic” flight when travelling (especially commuting) between UK mainland and IOM, JER, GCI, ACI, BFS, BHD, LDY or LSI – as well as arguably BEB, BRR, SYY, TRE or LSI.

  • TimM says:

    If there is an arbitrary charge with arbitrary boundaries, there will always be exploitations. Fair systems and those to encourage good behaviour are based on proportionality.

    The UK Government is completely torn between popularist green policies and unionist politicking. There is a bit of both in today’s APD announcement.

    Abolishing UK APD and getting international agreement to tax aircraft fuel instead would be bring the inevitable forward and encourage better green behaviour.

  • Benilyn says:

    Creation have blocked today’s chat thread as a way to censor what they are up to – ridiculous!

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