Government retains APD distance and class bands
Air Passenger Duty rate banding for both distances and seat class will not be changed, the government has said. The 4 distance bands will be retained. There will be no reduced APD rate for premium economy. The government said any banding system would produce some anomalies, and the 4 band system produces fewer than a 2 band system. APD will increase 10% from 1 April 2012 as announced in the Budget last week and business jets of 5.7 tonnes or more will be included from 1 April 2013.
The APD on a European flight, under 1000 miles, will only rise from £12 to £13.00.
The Treasury response to the consultation is at
6th December 2011
Air Passenger Duty (APD) rate banding for both distances and seat class will not be changed, the government has said. In its consultation document released today, the Treasury said 140 stakeholders had responded to APD reform, many in favour of a two-band system. Tourism boards and airlines had also long argued the discrepancies in the tax, which requires more to be paid on flights to the Caribbean than to the United States.
However, the government has confirmed it will not change the band system and that any structure would feature anomalies. “A move to a two band structure would require passengers travelling within the UK and Europe, and those travelling to band B destinations (including the United States), to pay more in order to ensure overall revenue neutrality. In addition, any change to the banding structure would have some transitional costs for industry and HMRC,” the government explained in its statement.
In addition, the government said there will be no reduced APD rate for premium economy seats as each airline’s product differs from others and it would increase the tax’s complexities. It will also not offset revenue generated from the Emissions Trading Scheme, so passengers will be taxed twice from January.
ABTA said it was disappointed with the announcement after persistent work by its team, members and the industry as a whole. “To completely ignore all recommendations after a lengthy consultation is extremely disappointing. The Government has missed an opportunity to make this tax fairer and instead has increased the burden on British businesses, passengers and popular destinations, such as the Caribbean that are caught by unfair banding,” said Mark Tanzer, CEO of ABTA. “If the Chancellor believes that tourism is critical to boosting growth in the UK economy, he needs to give the industry a break and reconsider these decisions”.
The document confirmed that APD will increase 10% from 1 April 2012 as announced in the Budget last week and business jets of 5.7 tonnes or more will be included from 1 April 2013.
APD distance bands APD £ per passenger from 1 April 2012 (old rates from 1.11.2010)
Miles from UK Reduced rate Standard rate * (in lowest class of travel) (in other than lowest class of travel)
Band A (0-2000) £13 (£12) £26 (£24)
Band B (2001-4000) £65 (£60) £130 (£120)
Band C (4001-6000) £81 (£75) £162 (£150)
Band D (over 6000) £92 (£85) £184 (£174)
* premium classes, business class, first class etc
|Private Jets: The extension of the tax base to all flights on aircraft of 5.7 tonnes or more is estimated to bring an additional 50,000 flights within the scope of APD. Between 5% and 10% of these flights will be captured by the new premium tax rate (planes with a certified authorised weight over 20 tonnes and fewer than 19 seats).|
Autumn statement by Chancellor. U-turn on Gatwick and Stansted airports and consideration of estuary airport. But APD will rise in April
Date added: November 29, 2011
In this autumn statement, George Osborne – in a desperate attempt to boost the economy – has turned his back on environmental safeguards and the green economy, to encourage high carbon infrastructure. He has said he wants to improve, performance and resilience of airports. He says the Government is committed to maintaining the status of the UK as an international hub for aviation, with excellent connectivity to both developed as well as emerging markets. He said “And we will explore all the options for maintaining the UK’s aviation hub status, with the exception of a third runway at Heathrow.” So that means runways at Gatwick and Stansted are to be considered again, as well as looking at an estuary hub. However, on the plus side, even with all the lobbying by the aviation industry for APD to be reduced or frozen, the rates will rise in April 2012 in line with inflation. APD is then likely to rise to £13 (from £12) per passenger for European flights; and rise to £65 (from £60) for Band B; to £82 (from £75) for Band C; and to £93 (from £85) for Band D. Details to be announced by government in APD review on 6th December. Future projections of UK air passengers are very high – up to 335mppa (within the range 300mppa to 380 mppa) in 2030 and to 470mppa (within the range 380mppa to 515 mppa) in 2050 – compared to 211 million passengers per annum (mppa) in 2010 . Therefore the government believes there will be an airport capacity challenge in the south east after that date. This was not a good day for the environment, and the last hopes that this government really might be trying to be the “greenest government ever” have faded.
AirportWatch welcomes Air Passenger Duty increase
6.12.2011 (AirportWatch press release)
AirportWatch  has welcomed the government’s announcement today  that Air Passenger Duty (APD) will be increased. Sarah Clayton, spokesperson, for AirportWatch, said “We are pleased that the Coalition government has kept its resolve and increased APD in spite of fierce and persistent lobbying by the aviation industry.
In these difficult economic times it is absolutely right that the aviation industry and its customers join the rest of society in making their fair contribution towards the country’s finances. Aviation remains greatly under-taxed compared with most other sectors of the economy, which pay duties on the energy they use. Aviation still pays no fuel duty and no VAT . This increase in APD makes a small but important step towards fairer taxation”.
The Treasury has reiterated that APD is not an environmental tax. 
Notes to Editors
Note . AirportWatch is an umbrella movement uniting the national environmental organisations, airport community groups, and individuals opposed to unsustainable aviation expansion, and its damaging environmental effects, including climate change. www.airportwatch.org.uk
Note . AirportWatch calculations, based on government figures, show that if aviation were taxed at the same rate as motorists and VAT were paid at the standard rate, this would raise about £11 billion per annum for the Exchequer. Subtracting APD, the aviation industry still benefits to the extent of £8½ billion pa. http://www.airportwatch.org.uk/?p=5935
Note . Quote: “The Government has been clear that APD is primarily a revenue-raising duty which makes an important contribution to the public finances, whilst also giving rise to secondary environmental benefits. Furthermore, VAT is not applied to flights and aviation fuel for commercial flights is not taxed.” Page 14 of Treasury response on APD. http://www.hm-treasury.gov.uk/d/condoc_responses_air_passenger_duty.pdf
ABTA – predictably – is complaining about the rise in APD and the bands being retained;
ABTA Disappointed by Government’s Failure to Reform APD
Date published: 06 December 2011
Despite strong calls for reform from industry and passengers, the Government today revealed that it will not make any structural changes to Air Passenger Duty (APD) following a lengthy consultation process. The announcement follows last week’s Autumn Statement, which revealed an eye-watering 10% increase in APD from April 2012.
ABTA has been calling for the Government to freeze the increase in APD; change the banding structure to two bands to make it fairer; and reduce the amount of tax paid on premium economy seats to ensure they are not classed in the same way as business and first. ABTA has also been campaigning for short haul flights from Northern Ireland to be exempt from the tax, given the shared land border with the Republic of Ireland. The Government has already announced that long haul flights from Northern Ireland will be subject to reduced rates of APD and the revenues saved by this will be offset by the inclusion of business jets.
“The Government has rejected all common sense recommendations from industry to reform this tax and gone ahead with a 10% increase,” said Mark Tanzer, CEO ABTA. “To completely ignore all recommendations after a lengthy consultation is extremely disappointing. The Government has missed an opportunity to make this tax fairer and instead has increased the burden on British businesses, passengers and popular destinations, such as the Caribbean that are caught by unfair banding. If the Chancellor believes that tourism is critical to boosting growth in the UK economy, he needs to give the industry a break and reconsider these decisions.”
The Government also stated that it will not offset revenues raised through the Emissions Trading Scheme (ETS) against APD, meaning that passengers will be taxed twice when they fly from January 2012.
Under the current banding structure, countries are banded based on where their capital city is located. This has given rise to many unacceptable tax burdens on destinations such as the Caribbean where holidaymakers pay more tax than they would to fly to Hawaii.
ABTA will meet with other industry groups as part of the Fair Tax on Flying Campaign to refocus its efforts on calling for a fairer tax regime.
The ‘Fair Tax on Flying’ campaign, is backed by an alliance of over 30 companies ranging from airlines, tour operators, destinations and travel trade associations, calls on the Government to make UK aviation tax fairer. For more information visit: http://www.facebook.com/afairtaxonflying
see also article in the Independent at