Air tax rise likely to hit 6.5m travellers

Steve Parsons/PA

A controversial rise in air passenger duty is expected to be announced by the Chancellor later this month in a move that could hit around 6.5m travellers.

Although the rises will affect all flights taking place after April 1 next year – it is thought that anyone buying tickets before April for later in the year could also be hit.

The announcement of the increase is expected in the Chancellor's Autumn Statement on November 29. For some journeys the tax could increase by up to a third, according to a Government consultation document.

Critics also point out that the expected 10% 'average' hike, equal to double the rate of inflation, will not be evenly spread. This means the air tax could increase from the current level of £12 per person to £16 for economy flights up to 2,000 miles - taking in most of Europe.

The travel industry and businesses leaders are urging the Government to drop the tax as they argue that it is deterring passengers and putting the UK economy at a disadvantage.

Backdated tax
In a report in the Daily Mail, Virgin Atlantic said the Government has so far failed to rule out a double inflation increase in Air Passenger Duty rates next year, nor said when any such rises would take effect.

If the increases in Air Passenger Duty rates are similar in scale to those in November 2010, this would amount to an additional Treasury tax bill of almost £5 million from Virgin Atlantic's passengers alone.

Virgin has expressed concerns that its customers who have already booked flights for travel after April 2012 could be hit by backdated tax. The company says any increases should be introduced with a 12 month lead-in time to avoid a situation where passengers are forced to fork out significant amounts in retrospective tax.

Double inflation hit
Chief Commercial Officer Julie Southern told the newspaper: "We are very concerned that the Chancellor has failed to rule out retrospective rises in Air Passenger Duty. Hundreds of thousands of our customers could be affected by this, and industry-wide the numbers will be greater still, with millions of people contributing tens of millions in extra payments to the Treasury's coffers.'

She said: "UK aviation taxes are already some of the highest in the world, and a retrospective application combined with a double-inflationary increase would make matters even worse."

Crippling economy
Willie Walsh, chief executive of British Airways' parent company, International Airlines Group (IAG), recently accused the government of "crucifying the UK economy" with its addiction to raising taxes to fill its empty coffers.

He also said increasing APD was going to have "a huge negative effect" and accused ministers of using the air tax to reduce the economic deficit. Talking at the annual conference of the Airport Operators' in London last week, he said the UK had already lost 7.4 million passengers last year and passenger numbers had fallen for the past three years running.
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