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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)

  • Will says:

    I know it’s a totally radical idea, but isn’t it about time we talked about racing aviation fuel and ring fencing the revenue for carbon reduction relative to fuel burned.

    Far easier to administer and achieves the stated aim while incentivising reducing fuel burn.

    • Richie says:

      Yes and all that VAT that’s not collected on First class flight tickets.

      • Howard says:

        APD is instead of VAT, which most corporate customers would claim back, APD means they can’t claim it back.

        • Richie says:

          I mean in addition to APD.

        • RussellH says:

          Or you simply add a clause to the VAT rules saying that VAT on flights is not reclaimable.
          Austria does this on motor fuel – or at least did when I was doing business there.

    • BuildBackBetter says:

      Companies will simply buy fuel abroad. BA will buy fuel at the destinations rather than Heathrow.

  • Dubious says:

    Must be a shame for Armenia too, if only they had used Nautical Miles in keeping with the aviation theme instead of statue miles…
    LON-EVN = 1955 NM / 2249 miles
    (EVN being about 5 NM from the city centre)

  • Grumpy Chicken says:

    It seems utterly perverse from an environmental standpoint to reduce the tax on domestic flights, where most people could take greener transport such as the train, and increase tax on routes where there is no green alternative to flying. This government hasn’t got a clue.

    • Mike says:

      If people could take the train, then they probably would. Very few people enjoy going through security then jammed into a metal tube at altitude sitting next to a person you wish permanent injury on.

      • Dubious says:

        The view from a metal tube at altitude can be nicer than the views from a metal tube on rails…particularly when the latter have no capacity controls nor rules around music and underpowered air conditioning to remove smelly food smells.

      • Gruntfuttock says:

        👍 Comment of the day! I literally ROFL. Spot on Mike

  • His Holyness says:

    It’s so simple but no one wants to face up to it. If you’re the kind of person who lives off Sir Patrick Valance’s every word for Coronavirus then you should respect the science on climate change too. There is no such thing as carbon neutral flying, the only environmentally safe travel is no travel whatsoever.

    Even with a lockdown across the world, the UN says it had literally no effect on carbon emissions. The only solution is to shut everything down for decades.

    Now as this is obviously entirely ridiculous, I don’t give a second of attention to any climate “science” I hold it in the same regard as coronavirus science. Unless you take the same attitude as me, you can’t believe the science on Corona, but ignore the science on climate change.

    As Sir John said, put up or shut up.

    • Oh! Matron! says:

      I’m going to go out on a limb here, and suggest two things:

      Like Austria (or was it france), there should be a hideous amount of tax on a route where there is a viable train route. That’s definite LHR-MAN, but I’m sure that there are others

      BUT…. 50% of APD should go to discounts on train tickets in the UK. Why should there be VAT on fuel for trains but NOT flights. Until that changes, people will continue to fly

      • Michael AC says:

        The train vs plane issue gets complicated when you consider connecting flights. If internal flights like those became very expensive, people would just start connecting in Frankfurt or Amsterdam instead and avoid London altogether. Worse for the environment (because it’s more flying) and UK airlines lose money. That’s not to mention the hassle of someone having to take a train to London then back out to Heathrow to get on a plane with all their luggage (and the same on the way back), instead of getting on a plane in Manchester.

      • Anna says:

        It’s currently at least £100 for a return train ticket from Manchester to London, even if you book 3 months out. You can easily pay £200 if you have to go at short notice during business hours. Of course this won’t translate to more flying, especially as there’s no MAN-LCY flight any more, but it does mean that people are more likely to use their cars. Or not go at all so not spend money in the capital.

        • Dubious says:

          This point is very true and points towards the whole blame game of who needs to change behaviours to change climate.

          How does the environmental impact of car journeys compare to those from domestic flying?

          Surely the biggest emissions come from power generation and the transportation of stuff around the world, not just by air but loads and loads of the stuff by land and sea). Do we really need all the stuff??

        • Muzer says:

          The undiscounted off-peak return is £94.50, which last time I checked is not at least £100. Few travellers will end up paying that fare anyway; cheap advances are readily available. Three months might be too long though; not sure how far in advance advance fares are being released right now. I picked a random weekday in late November and found (one-way) advances available for £28.70; two of these and you’d be talking £57.40. Which is rather substantially less than £100.

          Yes, peak time fares for business travellers are much more expensive. These fares are unregulated for long-distance journeys so operators are allowed to set ridiculous prices knowing that people travelling on expenses will still pay them. It’s a problem.

          • Anna says:

            But most people wouldn’t be doing leisure breaks on week days. There haven’t been any reasonable weekend fares for ages. I paid about £48 return to EDI recently, which is a very similar distance.

      • John says:

        It’s at least 4 trains (or 3 and a walk) to get from LHR to MAN.

      • Mike says:

        LHR-MAN isn’t a viable train route compared to a feeder domestic flight.

  • Mikeact says:

    I can see changes coming to Avios redemptions….RFS particularly .

    • BuildBackBetter says:

      Why? With domestic cash tickets expected to become cheaper, BA will gladly take the higher avios.

    • Rob says:

      APD changes won’t touch RFS. Heathrow adding £10 to take-off charges, on the other hand ….

  • Mikeact says:

    And after April 2023, a typical BA Club to Cape Town will cost..?

    • ChrisC says:

      Whatever BA want to charge for it and whatever people are prepared to pay for it or not.

  • John says:

    Probably similar to today (in proportion to the price of flying anywhere else) as BA will have to absorb the higher APD in its base fares.

  • Bagoly says:

    The 19 seat cut-off presumably chosen to allow Loganair’s Twin Otters to get Reduced Rate while small private jets get the whopping Higher Rate.
    Although larger private jets with more than 19 seats apparently only pay Standard Rate (pitch being too great for Reduced)

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