by James Ruggia
Last updated: 2:14 PM ET, Fri March 21, 2014
PHOTO: Big Ben as seen from the air. (Courtesy of VisitBritain)
Britain's onerous Air Passenger Duty (APD) tax has been modified but not in a way that will help American fliers. The change is part of the new budget that was announced by Britain's Chancellor of the Exchequer George Osborne on Wednesday. Taking effect in April, 2015, the new APD changes the structure of the tax so that very long-haul destinations such as Australia and India will pay at the same rate that Americans do. The APD tax is paid by fliers as they leave the U.K. For Americans the tax remains the same, £69 ($113.24) per head for economy class tickets and £138 ($226.49) for business and first class passengers. The APD's top rate is some 8.5 times the average of other countries in Europe that still levy a charge.
In making the announcement, Osborne characterized the APD as a "crazy system where you pay less tax travelling to Hawaii than you do travelling to China or India." He said that it "hits exports, puts off tourists and creates a great sense of injustice among our Caribbean and South Asian communities here in Britain."
While Britain's immigrant communities and domestic travel industry have been leading the local charge against the tax, international travel associations such as the World Travel & Tourism Council, the Pacific Asia Travel Association and the Caribbean Tourism Organization have carried the ball in the global travel industry. The WTTC claims that removing the APD would result in an increase of up to £4.2 billion in GDP and the creation of up to 91,000 jobs.
The APD tax emerged in 1994 as a £5 rate for passengers flying within the UK or the European Union and £10 for flights heading elsewhere else. Since then it's steadily increased and grown more complex, tailoring itself according to what destination the departing passenger was flying to. The changes announced Wednesday and taking place in April will essentially create one long-haul rate for all flights departing for everywhere except short-haul European destinations less than 2,000 miles from London.
Until now, APD rates had been determined by four geographical bands that were introduced in 2009 based on the distance from London to the capital city of the country concerned (with the exception of the Russian Federation, which was split into both east and west of the Urals). The tax's fee depended on which of the four destination bands were being traveled (each with two rates of duty depending on the class of travel, economy or premium). Altogether the four bands were for flights to 1) less than 2,000 miles, 2) 2,000 to 4,000 miles, 3) 4,000 to 6,000 miles and 4) more than 6,000 miles. Under the new structure there will be two zones: short haul for flights under 2,000 miles and long-haul for everywhere else.
The impact of Wednesday's announcement won't be felt by American travelers unless they're flying from London to Asia, Australia or some other destination that had previously fallen into zones three or four. Until now, the British government stood in strong defense of a tax that according to the country's Office of Budget Responsibility (OBR) generated £2.7billion in 2011-12, was expected rise to £3.9 billion by 2016-17.
Editor's note: Brian Major presents a different take on the APD changes, illustrating their benefits for Caribbean destinations, here.
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