Budget: Higher taxes for airline passengers

Airline passengers will be hit by a tax increase, with a sharper rise for those in premium cabins.

The Treasury announced it will increase the level of air passenger duty (APD) for flights from UK airports by the forecast Retail Prices Index measure of inflation.

But the rates for premium economy, business class and first class ticket holders will be “further adjusted for recent high inflation to help maintain their real terms value”, it said.

Unlike leisure travel, flights for business have failed to return to pre-coronavirus levels.

The Treasury’s announcement relates to the 2025/26 financial year and is expected to generate £110 million in revenue in the first 12 months.

APD rates for passengers in premium cabins on departures from UK airports currently range from £13 to £200 based on the distance of the flight.

The range will rise to between £14 and £202 in the 2024/25 financial year.

Tim Alderslade, chief executive of Airlines UK, the industry body representing UK-registered carriers, said: “The decision to increase APD goes against the Prime Minister’s commitment not to discourage flying through taxation.

“Hitting passengers – including families and those travelling for leisure – with stealthy tax rises will only make the UK even less competitive on the global stage.

“The UK’s aviation taxes and airport charges are already among the highest in the world.

“The Government should instead focus on supporting the industry’s transition to net zero which the US and EU has made billions of pounds of support available for, unlike here in Britain.”

Clive Wratten, chief executive of the Business Travel Association industry body, said: “The introduction of an increase in non-economy air passenger duty is disastrous for the economic welfare and wellbeing of British businesses and their employees.

“Contrary to common misconceptions, business travel is not just for the wealthy.

“This tax will hinder growth for small and medium enterprises through limiting international collaboration opportunities.

“It will hit charities, academics and researchers alongside businesses of all sizes combating rising costs in every area.

“There is no mechanism for ensuring that the monies from this tax will go into innovation in the airline sector nor into sustainable aviation fuels.

“This is therefore just another tax on British businesses.”