BUSINESS NEWS


APD will increase by 11% for passengers flying long-haul premium economy and business class from next year


APD hike is simply latest in duty’s 30-year history


Rates to increase for premium long-haul flying from April 2025. Ian Taylor reports


The “one-off adjustment” in Air Passenger Duty (APD) on “non-economy” flights beyond Europe, announced in last week’s Budget, was a blow to the long-haul premium sector. It means an 11% rise in APD on


premium economy and business class seats to destinations more than 2,000 miles from London, adding £22 to the duty on fares from April 2025. But the chancellor’s resort to APD to raise revenue was anything but new. APD will have been levied for 30 years come November and the


48 14 MARCH 2024


Treasury’s line in that time has not changed. The duty was introduced by


Conservative chancellor Kenneth Clarke from November 1994 at £5 on flights in Europe and £10 beyond, with Clarke noting: “I need to raise revenue . . . in a way which does least damage to the economy.” He argued APD was justified because: “Air travel is under-taxed. It benefits not only from a zero rate of VAT, [but also] is entirely free of tax.” Rates doubled from November 1997 but were changed in 2001 with


a ‘reduced rate’ for economy and a higher ‘standard rate’ on premium or business classes, meaning £5 or £10 for European flights and £20 or £40 for flights beyond. Responding to industry pressure in 2003, the government asserted the “principal purpose” of APD was “to raise revenue from aviation”. The failure to increase APD


rates further drew criticism from the Treasury Select Committee of MPs


Continued on page 46 travelweekly.co.uk


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