APD rises by only rate of RPI but that does not stop Heathrow and AOA complaining (again …) it should be cut

Air Passenger Duty is just £13 for an adult (over 18) for any return flight to Europe.  It is £26 for a return flight inside the UK.  It is just £75 for an adult to any destination further away than 2,000 miles, and higher for higher class tickets. Air travel pays no VAT and no fuel duty, and the combined amount per year that these two could bring in amounts to around £8 – 10 billion per year, even after the receipts from APD are taken into account. APD is charged by the Treasury because there is no logical reason why air travel (most of which is discretionary, and much of which is for pleasure) should be untaxed. After cutting the rate of longer haul APD (over 4,000 miles) in April 2915, the tax as just risen by the rate of inflation – RPI. But the airlines complain about it every time there is a budget. Now Heathrow and the Airport Operators Association have complained again, that APD has not been cut. They would like to see air travel almost not taxed at all, to boost the number of passengers -and hence their profits. Heathrow has the DfT falling over itself to promote its 3rd runway. It is a little distasteful for it to be pressing for effectively further subsidy, when its runway would end up costing the taxpayer a huge amount in necessary improvements to surface access, which the airport is unwilling to stump up for.   It is indeed a very greedy industry, relentless in its demands.


There was no change to APD in Chancellor Philip Hammond’s Spring Statement on 7th March 2017

The Budget just said:   “3.26 Air Passenger Duty (APD) – APD rates for 2018-19 will be uprated in line with RPI. To provide good notice for the airline industry, rates for 2019-20 will be set at Autumn Budget 2017.”




Heathrow and AOA voice disappointment with UK Budget 2017

By International Airport Review


[The AOA is the Airport Operators Association]   So this article is purely the airport opinion

The UK Chancellor Philip Hammond has presented the 2017 Spring Budget suggesting he hopes it to provide a “strong, stable platform for Brexit,”

The UK Chancellor Philip Hammond has presented the 2017 Spring Budget suggesting he hopes it to provide a “strong, stable platform for Brexit,” something for which many regard Heathrow as integral.
Their views were of slight disappointment regarding Air Passenger Duty.

Responding to today’s Spring Budget, Heathrow CEO John Holland-Kaye said:

On Air Passenger Duty:

“We’re disappointed the Government has not taken the opportunity to reduce air passenger duty. The increase today, and the signal of potential further increases in the coming years, hands a great advantage to our European competitors. If Britain is to be one of the best places in the world to do business then we must work towards abolition of this tax on British competitiveness, tourism, investment and trade.”  http://mediacentre.heathrow.com/pressrelease/details/81/Corporate-operational-24/8346


And on increased investment and focus on technical education, John Holland-Kaye, CEO of Heathrow, said:

“We welcome the creation of ‘T Levels’ and extra funding for PHDs in STEM subjects which will help provide the workforce Britain needs for the future. Heathrow expansion, along with other strategic infrastructure projects, will create thousands of highly skilled jobs. These Government reforms are crucial to ensuring we can deliver a modern, affordable Heathrow and make sure today’s schoolchildren are able to make the most of the opportunities.”


Meanwhile, when responding to the Chancellor’s Budget Statement, Chief Executive of the AOA, Karen Dee said:  [Karen Dee has been Chief Executive of the AOA since 10.1.2017]

“Airports provide the necessary infrastructure for the UK’s international connectivity, with aviation the transport mode of choice for most people travelling to and from the UK and for 40% of the UK’s trade. Boosting that international connectivity through unlocking new destinations will be crucial to achieve the Chancellor’s aim of building the foundations of a stronger, fairer, more global Britain.

“That is why it is a missed opportunity for the Chancellor not to have cut Air Passenger Duty today and instead announcing another rise in line with RPI in 2018/19, on top of the RPI rise from April 2017.

The UK’s APD is already one of the highest air taxes in the world. With most of our nearest neighbours either charging nothing or less than half of what the UK levies, APD is a tax on the UK’s global competitiveness and connectivity.

The UK’s APD is already one of the highest air taxes in the world.

“Halving APD, as the AOA had called for alongside A Fair Tax on Flying campaign partners, would have brought the UK into line with the next highest APD equivalent in the EU, in Germany. It would have encouraged airlines to schedule new routes between the UK and new destinations, including in emerging markets, by making those flights more economically viable. It would also have made boosting capacity on existing routes more attractive.

“Cutting APD will boost the UK’s international connectivity and we urge the Chancellor to take action at the first available opportunity. We also continue to urge the Chancellor to make clear that any cut in any part of the UK would immediately be matched across the rest of the UK.”



The RPI was 2.6% in January 2017 Link

A 2.6% rise in a fee of £13 is 34p – but it is unlikely that will be charged.

A 2.6% rise in a fee of £75 is £2.


How much the UK loses per year because air travel pays no VAT or Fuel Duty

£8 – 10 billion is estimated

Annual loss to UK Treasury per year from aviation not paying VAT or fuel duty is around £8-10bn per year, even after taking account of APD.

Exact loss to the Treasury/year, of aviation paying no VAT or fuel duty is somewhere between £8-10bn /year

This was checked in 2012 by Full Fact here https://fullfact.org/news/does-government-subsidise-airlines-10-billion/ 

who went through the calculations, bringing them up to date with newer data in 2012.  While APD rises very slightly with RPI, the number of passengers rises. So the overall loss to the Treasury probably rises each year, depending on passenger growth.