Autumn Statement steath air duty shock

Virgin planePA

Not everything in George Osborne's Autumn Statement was announced in the House of Commons. As ever, it was followed by a huge tome of detail and data, and buried deep in the endless small print was a horrible shock for travellers.

There will be an incredible 8% increase in air taxes coming into effect in April.

Stealth tax

This is the very definition of a stealth tax. It's a levy we cannot get around - even if we have already booked the flights we'll get a bill for more tax. And instead of coming out and admitting to making a wild grab for cash under the radar, he pushed it out in the detail.

The government, of course, denies that the bad news was buried, and claims it had been signalled all along within documents relation to consultations on changes to the duty. It said if the airlines hadn't chosen to pass this information along it cannot be held responsible.

The airlines aren't overly impressed with this answer. Virgin Atlantic's chief commercial officer Julie Southern told the Daily Mail: "This stealth tax, hidden by the Government in the small print of a secondary document, isn't a tax on airlines, it is a tax on passengers - tourists, businesses and British families alike.

"We have been warning the Government for months of the impact this will have and have urged them to avoid this unnecessary situation. Hundreds of thousands of passengers have already booked travel with us after April 1st, meaning millions across the wider industry are likely to be impacted. People would never be expected to pay extra duty for the petrol already sitting in their cars or wine sitting in their fridge, so why does the Treasury think it is acceptable to retrospectively charge airline passengers?"

What it means for you

The extra charges will hit 74 million travellers over the course of the year. The rise will depend on the type of ticket you have booked and the length of the journey.

The extra tax on cheap, short flights shouldn't be too painful. Anyone flying less than 2,000 miles will pay £1 more in economy (£12) or £2 more in other classes (£24).

Those going a bit further, including parts of the US such as New York and California will pay £65 in economy (up £5) and £130 in all other classes (up £10).

Those going between 4,000 and 6,000 miles (including the Caribbean) will pay £6 more (£81 in economy) and £12 more (£162 in other classes).

And long-haul flights of over 6,000 miles to places like Australia will see a rise from £85 to £92 per person in economy and £170 to £184 in other classes.

Huge cost

In each instance the percentage rise is appalling, but on first glance the actual figures involved don't seem too bad. Are we really going to notice £1 here, or £10 there when we're forking out for an expensive break? That's until you add the rises onto the already considerable charges and realise just how heavy a burden this tax has become.

A family of four flying to Australia in economy class will pay well over £350 in tax alone for their flights. If they were to upgrade to a smarter ticket they would see the tax rise accordingly to almost £750 in tax for the family. This begins to make a real difference to whether or not the holiday breaks the bank.

And this won't be the end of it. The whole scheme is expected to be revamped in April 2013. Details are expected at the beginning of next week, but we can be sure that it's not going to amount to a tax cut. There's every chance it will just be restructured in order to find a way to squeeze yet more cash out of us.
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