The Chancellor has postponed another rise in Air Passenger Duty – but then British travellers are already among the most heavily taxed in the world. Charles Starmer-Smith looks at what we have lost and gained in the Budget. Inside, Nick Trend offers advice on how to keep travelling in cash-strapped times
The granting of a temporary freeze in Air Passenger Duty (APD) in the Budget this week may look good on paper. Following successive Labour Chancellors who have viewed British holidaymakers as something of a cash cow, George Osborne deserves credit, at least, for recognising the excessive burden they now face. "With the cost pressures on families, we think it would be fair to delay this April's Air Passenger Duty rise to next year," he said. But a temporary reprieve does not go nearly far enough.
Over the past six years this punitive tax has soared by 325 per cent on long-haul flights. For a family of four, duty has risen from £20 to £48 on a flight to France and from £80 to £340 on a flight to Australia.
Last year, Antonio Tajani, the European Union commissioner for enterprise and industry, said that taking a holiday was "a human right". If it is a right we are to exercise, the price must be affordable. No other country in Europe taxes people so much for the privilege of flying as Britain does. On average, Britons pay nearly nine times more than citizens in the rest of Europe. For example, a family of four living in Ireland or France pay just £10 and £15 respectively in their equivalent of APD, however far they fly.
Julie Southern, chief commercial officer for Virgin Atlantic, said after this week's Budget: "Although this move by the Chancellor is a welcome first step, Britain still has the highest air taxation of all European and G20 countries, and annual APD receipts are forecast to increase by over £1 billion in the next four years."
In order to meet the Treasury's target of £3.8 billion in APD receipts by 2015, up from £2.3 billion last year, future increases in APD are likely to be severe. British air passenger numbers are dwindling – down from 81 million in 2007 to 63 million in 2010. Our travelling horizons have also narrowed: Heathrow, our flagship airport, has fallen from first to fifth place in Europe in terms of the number of destinations served.
Britons are also reducing the length of their holidays to ensure that they can still afford their annual break. An analysis of more than three million holidays published this week by Co-operative Travel found that the percentage of four-night breaks has grown by 50 per cent and of 10-night breaks by 162 per cent since 2005.
British travellers are already having to tighten their belts. Leading tour operators have joined airlines in adding surcharges to flights in response to rising fuel prices, while low-cost airlines continue to add punitive fees for checking in luggage and paying by card. On Ryanair, for example, if each member of a family of four checks in one bag (20kg), they will be charged a total of £280 return during peak periods. On the same airline fees for paying by card ("administrative fees") have risen from £20 to £48 return for a family of four.
There is also the small matter of Britain's joining the European Union Emissions Trading Scheme (ETS) next year, as a result of which airlines face the prospect of paying twice for their carbon footprint – costs that will inevitably be added to fares.
"The Chancellor now needs to set out the Government's approach on reducing taxes on flying when the ETS comes in," said Simon Buck, chief executive of the British Air Transport Association. "There should be no double taxation of British aviation."
It was good to hear in the Budget that the worst inequities of Air Passenger Duty may be addressed, but frustrating that the commitment was not firmer – "may" remains the operative word. In their manifestos both the Conservatives and Liberal Democrats had promised to move to a system of taxing per plane rather than per passenger, but this week such a switch was all but ruled out by George Osborne, who said it would contravene international law.
At present, APD does not apply to private jets or their passengers. There was a commitment to "consultations" over that omission, but no detail on how, when and how much the owners of this most environmentally irresponsible form of transport will pay.
Mr Osborne promised to look at the farcical banding system of APD, under which passengers flying to the Caribbean pay more than those flying to Hawaii (some Caribbean islands last year experienced a drop in visitor numbers from Britain of as much as 25 per cent) – but he didn't say when.
Finally, the Chancellor said he would look at the disproportionate level of duty paid by passengers travelling in premium-economy class, but he gave no guarantee that those who like a little more legroom will fare any better than those who lie flat in first class.
APD causes difficulties not just for British travellers. Visitors to Britain are liable to pay the duty when they fly home, a fact that could prompt some holidaymakers and business travellers to bypass Britain altogether. That is an issue of real concern in the run-up to the 2012 Olympics.
A recent survey by the European Tour Operators' Association found that more than two thirds of inbound operators expect a 30 per cent drop in visitors to London in 2012 compared with 2011, while outbound operators anticipate an increase in visitors to Paris, Brussels and Amsterdam.
Earlier this month, John Penrose, the Government's new tourism minster, said that he hopes to see more Britons taking holidays at home. If APD goes up again next year, that might be our only option.
The granting of a temporary freeze in Air Passenger Duty (APD) in the Budget this week may look good on paper. Following successive Labour Chancellors who have viewed British holidaymakers as something of a cash cow, George Osborne deserves credit, at least, for recognising the excessive burden they now face. "With the cost pressures on families, we think it would be fair to delay this April's Air Passenger Duty rise to next year," he said. But a temporary reprieve does not go nearly far enough.
Over the past six years this punitive tax has soared by 325 per cent on long-haul flights. For a family of four, duty has risen from £20 to £48 on a flight to France and from £80 to £340 on a flight to Australia.
Last year, Antonio Tajani, the European Union commissioner for enterprise and industry, said that taking a holiday was "a human right". If it is a right we are to exercise, the price must be affordable. No other country in Europe taxes people so much for the privilege of flying as Britain does. On average, Britons pay nearly nine times more than citizens in the rest of Europe. For example, a family of four living in Ireland or France pay just £10 and £15 respectively in their equivalent of APD, however far they fly.
Julie Southern, chief commercial officer for Virgin Atlantic, said after this week's Budget: "Although this move by the Chancellor is a welcome first step, Britain still has the highest air taxation of all European and G20 countries, and annual APD receipts are forecast to increase by over £1 billion in the next four years."
In order to meet the Treasury's target of £3.8 billion in APD receipts by 2015, up from £2.3 billion last year, future increases in APD are likely to be severe. British air passenger numbers are dwindling – down from 81 million in 2007 to 63 million in 2010. Our travelling horizons have also narrowed: Heathrow, our flagship airport, has fallen from first to fifth place in Europe in terms of the number of destinations served.
Britons are also reducing the length of their holidays to ensure that they can still afford their annual break. An analysis of more than three million holidays published this week by Co-operative Travel found that the percentage of four-night breaks has grown by 50 per cent and of 10-night breaks by 162 per cent since 2005.
British travellers are already having to tighten their belts. Leading tour operators have joined airlines in adding surcharges to flights in response to rising fuel prices, while low-cost airlines continue to add punitive fees for checking in luggage and paying by card. On Ryanair, for example, if each member of a family of four checks in one bag (20kg), they will be charged a total of £280 return during peak periods. On the same airline fees for paying by card ("administrative fees") have risen from £20 to £48 return for a family of four.
There is also the small matter of Britain's joining the European Union Emissions Trading Scheme (ETS) next year, as a result of which airlines face the prospect of paying twice for their carbon footprint – costs that will inevitably be added to fares.
"The Chancellor now needs to set out the Government's approach on reducing taxes on flying when the ETS comes in," said Simon Buck, chief executive of the British Air Transport Association. "There should be no double taxation of British aviation."
It was good to hear in the Budget that the worst inequities of Air Passenger Duty may be addressed, but frustrating that the commitment was not firmer – "may" remains the operative word. In their manifestos both the Conservatives and Liberal Democrats had promised to move to a system of taxing per plane rather than per passenger, but this week such a switch was all but ruled out by George Osborne, who said it would contravene international law.
At present, APD does not apply to private jets or their passengers. There was a commitment to "consultations" over that omission, but no detail on how, when and how much the owners of this most environmentally irresponsible form of transport will pay.
Mr Osborne promised to look at the farcical banding system of APD, under which passengers flying to the Caribbean pay more than those flying to Hawaii (some Caribbean islands last year experienced a drop in visitor numbers from Britain of as much as 25 per cent) – but he didn't say when.
Finally, the Chancellor said he would look at the disproportionate level of duty paid by passengers travelling in premium-economy class, but he gave no guarantee that those who like a little more legroom will fare any better than those who lie flat in first class.
APD causes difficulties not just for British travellers. Visitors to Britain are liable to pay the duty when they fly home, a fact that could prompt some holidaymakers and business travellers to bypass Britain altogether. That is an issue of real concern in the run-up to the 2012 Olympics.
A recent survey by the European Tour Operators' Association found that more than two thirds of inbound operators expect a 30 per cent drop in visitors to London in 2012 compared with 2011, while outbound operators anticipate an increase in visitors to Paris, Brussels and Amsterdam.
Earlier this month, John Penrose, the Government's new tourism minster, said that he hopes to see more Britons taking holidays at home. If APD goes up again next year, that might be our only option.
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