Flying out, paying up

AIR travellers are set to face spiralling tax bills, Jeremy Gates reports

STRONG hopes of cheaper long-haul holidays this summer, particularly to the Caribbean and Australia, are fading fast as the coalition Government is believed to have ditched plans to reduce the high taxes it levies on all flights leaving Britain.

The travel industry has mounted a sustained campaign against Air Passenger Duty (APD) which has risen by up to 325 per cent in the past six years and ensured travellers flying out of Britain pay around £2bn in tax a year. This is far more than any other country in Europe, and many think it’s hit levels which may deter people from travelling.

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Rival governments, including the new administration in Ireland, are cutting the tax or abolishing it altogether – to increase visitor numbers and boost their own economies.

Airlines claim APD persuades many passengers to dodge Britain altogether by changing planes in Europe instead of flying on British airlines into London.

APD ranges from £12 for an economy ticket to European cities, to £170 flying business class to Australia. The further you fly, the more you pay.

APD also attracts fierce criticism from Britain’s home-based tourism industry, because a family of four visiting the UK from a medium- or long-haul destination is clobbered by a tax bill on departure of £240-£340. And in premium class cabins, this can rise to £680.

Caribbean countries particularly fear the impact of APD, claiming it deters thousands of British travellers from visiting the islands, especially in summer months when prices are lower.

In January, Caribbean tourism officials announced they were “extremely confident” the British Government understood their pleas – and that a compromise, which might presumably allow the Caribbean a lower tax rating, would emerge in Chancellor George Osborne’s Budget on March 23.

However, a Financial Times report, which looks like an official leak 10 days before the Budget speech, says the Government has had to drop any plans to switch from a ‘tax per passenger’ to a ‘tax per plane’ –- the compromise which the travel industry wanted, to ease the burden on individual travellers.

In fact, their burden is set to get progressively heavier, with indications tax take must creep higher still – from the current £2.2bn, which APD will raise this year, to £3.6bn by 2015.