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Coalition airline tax plans could be worse than APD

Air travel

Plans by the coalition government to abolish the controversial Air Passenger Duty which has particularly affected people traveling on long haul flights to the Caribbean may be replaced by an even more costly ‘per plane’ duty.

Section three of the coalition agreement states:

‘The parties agree that a switch should be made to a per-plane rather than per-passenger duty; a proportion of any increased revenues over time will be used to help fund increases in the personal allowance.’

Air Passenger Duty was introduced as a duty charged for passengers traveling from UK airports under four bandings and has increased by up to 325 per cent since 2006.

Caribbean travel agents and MPs have been campaigning against the way that the APD has been introduced because a new banding system, based on the capital city, placed the Caribbean as further than Hawaii, thereby increasing travel costs to the Caribbean. Brent Central MP and new Minister for Education, Sarah Teather, was one of the most vocal voices against APD.

A further rise in APD was due this November.

However plans to replace APD with a different tax in order to encourage airlines to travel with full planes, could be passed on to passengers and ultimately cost more than the APD.

Gareth Williams, CEO of flight comparison website, Skyscanner said:

“The government classified APD as a green levy to discourage long haul flights by putting a financial burden on passengers. As this tax was never specifically ring fenced for investment in environmental or carbon offsetting initiatives many felt it was simply a revenue generating device for a government suffering from a significant budget deficit.

The abolishment of APD in favour of a ‘per plane levy’ means airlines would be charged per plane in order to incentivise them to fly with full aircrafts or invest in more fuel efficient fleets.

Airlines are already struggling to deal with record fuel prices and, while initially this policy may appear to remove financial burden directly from passengers, ultimately the airlines will still need to manage this cost so it will inadvertently be passed on to consumers.”

Dominic Bascombe

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