Whenever we hear the words ‘Chancellor’s Budget’, we usually emit a groan, envisaging yet more measures to hit our already-squeezed pockets! However, Chancellor George Osborne’s latest Budget actually delivered good news for the airline industry! The man in government who looks after the purse strings has finally admitted that the UK’s current, and much-hated, APD (Air Passenger Duty) airport depature tax is “crazy and unjust”… at last, I hear you utter!
The Chancellor said that it wasn’t right that Britons travelling on an 8-hour flight to Barbados, for example, should be paying more APD than those flying to California, an 11-hour flight! Announcing changes, Mr Osborne is scrapping the two upper levels of the four APD tax bands, resulting in travellers on long-haul flights paying the same as those flying to the USA.
Travel companies, the UK airlines and the Caribbean tourist boards, who have complained long and hard about the APD tax system, welcomed the announcement, albeit with caution. A spokeswoman for Virgin Atlantic was more vocal: “A two-band APD rate is a very welcome simplification to remove some of the biggest distortions of the current system, which the Chancellor himself admitted is crazy and unjust.” She added: “There is a growing body of evidence demonstrating the huge economic benefits to the UK of reducing or abolishing APD and we hope that the Government will continue to go further in the long run.”
But not everyone is happy… a spokeswoman from British Airways didn’t have a good or positive word to say about the Chancellor’s move, saying: “This is window dressing a tax that even George Osborne says is ‘crazy’. It still punishes families and costs UK jobs. The only long-term solution is to scrap APD in its entirety. APD remains the highest aviation tax levied in the world.” It’s a shame that such a large global airline can’t even say one positive word about a “step in the right direction” that Dale Keller, Chief Executive at the Board of Airline Representatives in the UK believes the Chancellor’s Budget has delivered!
The only drawback is that the reduction to a 2-band APD system won’t take place until 1st April 2015, and then there’s the RPI-inflation rise that is due to take effect. However, as a compensation, George Osborne also announced that the Government is going to extend the regional air connectivity fund’s scope so that it will include start-up aid for new routes via regional airports.
By Oliver Derek