The U.K. government will reduce for many long-haul flights the air passenger duty (APD) levied on travelers departing U.K. airports, Chancellor of the Exchequer George Osborne announced on Wednesday in his annual budget.
APD currently is charged on all flights from U.K. airports in four bands according to the distance from London to the destination country's capital city: less than 2,000 miles, 2,000 to 4,000 miles, 4,000 to 6,000 miles and more than 6,000 miles.
Osborne said the two upper bands will be abolished, so that one band will cover all flights of more than 2,000 miles. The change will take place in April 2015, he said.
The policy change reduces the tax on flying to India and the Caribbean to 69 British pounds from 85 pounds in economy class and to 138 pounds from 170 pounds in premium cabins, making it the same as for flying to the United States.
APD on flights to Australia, Singapore and Argentina is effectively reduced from 96 pounds in economy and 192 pounds in premium cabins.
Travel buyers, travel management companies and other groups within the U.K. travel industry long have campaigned for a reduction in APD, which is by far the highest departure tax in the Western world and since 2007 has risen 470%.
In 2013, the World Economic Forum ranked the U.K. 138th out of 139 countries for the competitiveness of its air taxes and airport charges, with only Chad ranked lower.
Until Wednesday, the U.K. government had given little indication of willingness to reform APD, but in his budget speech Osborne acknowledged the duty "hits exports." He added: "From next year, all long-haul flights will carry the same, lower, band B tax rate that you now pay to fly to the United States."
Responding to the announcement, Institute of Travel & Meetings CEO Simone Buckley told Business Travel News: "This is good news for the industry as a whole and particularly for our buyer members, who will welcome the potential reduction in APD costs for long-haul travel as well as the simpler and clearer method of calculation. It recognizes the negative impact that this heavy tax was having on companies which rely on their employees traveling around the world to do business."
Tzell UK executive director of business development and acquisition Barry Whittaker said: "We believe there is still scope for this stealth tax to be reduced further and eventually abolished, but today's news is a positive step for U.K. business, airlines, airports and travelers."
Source: Business Travel News