UK plans sharp increases in Air Passenger Duty

In its Pre-Budget Update on 24 November 2008 the UK Government announced that it planned to increase its Air Passenger Duty (APD) and restructure it to move from two to four bands based on distance.

In his speech the UK Chancellor said:

"As the Government has demanded, aviation will now be included in the emissions trading scheme from 2012.

This is a major step towards achieving our environmental objective of reducing the impact of aviation on climate change.

It has enabled me to look again at our proposals for reforming air passenger duty.

Mr Speaker, last year, there was cross-party support for a reform of air passenger duty to a tax per plane.

As much as I am in favour of a bipartisan approach, it seems in this case not to have reached the right conclusion.

This proposal could harm the aviation industry at a time when it is facing huge problems.

So instead I have decided to reform APD into a four-band system ensuring those that travel further and have a larger environmental impact meet that cost.

I believe this will be effective in reducing emissions from aviation."

Details are contained in Chapter 7 of the 2008 Pre-Budget Report and a release from HM Revenue & Customs. The latter details the impact on travel to individual countries.

HM Treasury also released a 37-page response on the consultation it had done on moving from a per passenger to a per plane charge.

UK media coverage included that from:

• The Independent
  
• the Telegraph
• the Times
• the Guardian
  

Airline reaction came in media statements from:

• IATA
• the European Low Fares Airline Association (ELFAA)
  
• the British Air Transport Association (BATA)
  
• Ryanair
  

ABTA - The Travel Association also commented.

The announcement came the day before New Zealand's New Prime Minister, John Key, met with UK Prime Minister, Gordon Brown.

NZ media coverage included that from:

• the National Business Review
• the NZ Herald - editorial
  

Tourism is New Zealand's largest export earner and the UK is New Zealand's second largest visitor market.

Australian reaction was reported in The Age.