25 Mar

Opinion: Securing APD reform was a significant win, but the fight goes on

Last week's Budget announcement vindicated the work and persistence of the A Fair Tax on Flying lobby group in putting its argument against APD, says Abta's Stephen D’Alfonso

Last week's Budget announcement on Air Passenger Duty was a welcome and significant move by the government.

From 2015 UK Air Passenger Duty (APD) is to be restructured with the abolition of the two most expensive bands and charging of all long-haul passengers at the lower band B rate of duty.

This will reduce the cost of long-haul flights, making destinations such as Australia, India and Brazil more accessible to Britons and vice versa, while travellers to the Caribbean will no longer face competitive disadvantage compared with destinations such as Hawaii.

It would be odd to be anything but positive in response to any step that reduces the tax-take from APD.

And this decision by Treasury vindicates the hard work, commitment, and persistence shown by the diverse organisations within our industry who have been united for a number of years in lobbying for a change and reduction to this damaging duty. 

But it would also be wrong to intrepret this as the end of the road for our APD campaigning. On the contrary, it shows that when we make a compelling case, the Treasury will listen and act.

It is a significant point of progress – and one that should not be underestimated – that the government has finally acknowledged that APD is a tax that is damaging growth.

The A Fair Tax on Flying campaign has been making the case that holidaymakers, businesses and the aviation and tourism sectors are all harmed by APD, a fact borne out by a growing body of evidence, including last February’s excellent PricewaterhouseCooper report.

The government’s plans to restructure APD is an important first step towards making the UK a more competitive place to visit and invest in.

I remain convinced that these changes will help to demonstrate that Britain is open for business, encouraging more inbound tourism and giving a much needed fillip to the tourism sector. 

In reforming APD, the government had to start somewhere.

A more than £200 million pound tax cut for the sector is nothing to scoff at in the restrained spending environment we find ourselves.

We should all remember that we’re still in the middle of the government’s deficit reduction programme after all. However, the Chancellor’s decision must be just the first step in a wider review of the tax, its overall level, and its impact.

We mustn’t forget that passengers will continue to face the highest taxes on air travel anywhere in Europe, and those flying domestically are still hit twice.

Long-haul passengers will continue to pay more than £70 per person in tax, a significant proportion of the overall cost to fly, whether it be for business, for leisure, or to visit friends and relatives.

Let’s also not forget we’ll have to wait another year before the changes come into effect.

So there is much more to continue to fight for to address the damaging impact of APD and Abta, along with other members of the Fair Tax on Flying campaign, is as committed as ever to making the case, and keeping up the pressure on this important issue.

Stephen's opinion piece was published by Travel Weekly.