With the goings on in the UK Parliament the decision to increase Air Passenger Duty (APD) has managed to slip by without too many complaints. This despite the fact that APD could be catastrophic for the UK’s travel industry with its value set to rise by up to 122% in 2010. This for a pure stealth tax that brings no benefit to transportation infrastructure or environmental projects.

From November the tax paid on flights departing the UK will fall into 4 bands, with passengers charged according to how far they fly and where the capital is located. For the US the APD will be £60 per passenger in economy from November 2010 (£120 in a premium cabin, including Premium Economy), regardless of if you are flying to New York or LA. For the Caribbean, South Africa, India, Mexico and Brazil the 2010 rates will be £75 (£150 in a premium cabin), while in the top band, which includes the likes of Australia, Argentina, Malaysia and Singapore, the rate will be £85 (£170 in premium).

For a family of four flying from the UK to Australia in Premium Economy that means a tax bill of £680. Ironically the decision was made at the time when the Dutch government has zero rated APD. Smart travellers living in the UK will, therefore, fly to Schiphol, paying the £12 short haul tax and then pick up their long haul ticket from a Dutch operator for a saving of  £632. The losers will be UK tour operators and the likes of British Airways, bmi and Virgin. It will also make it less appealing for foreign long haul carriers to fly direct to the UK.

customs.hmrc.gov.uk

5/26/2009 7:40:03 AM UTC    Comments