UK airlines and aviation bodies have welcomed the announcement of a Government consultation on on measures to reform domestic Air Passenger Duty (APD) for domestic flights.
The cut in APD is aimed at bolstering travel connections and stimulating the economic recovery from the COVID-19 pandemic within the UK.
A consultation will examine options including creating a lower domestic rate or exempting return flights. The announcement of the measure comes as Prime Minister Boris Johnson pledges new funding to upgrade road, rail and sea connections across the UK to stimulate economic growth. The The Union Connectivity Review, commissioned by the PM, published its interim results today. The review has been looking into strategic road and rail links with £20m already committed to improve these, as well as a review of a bridge between Northern Ireland and Scotland.
Airlines UK – cut will help “levelling up” agenda
Airlines had been lobbying for a reduction in APD before the COVID-19 pandemic sent demand into freefall. Tim Alderslade, Chief Executive of Airlines UK, the industry association representing UK-registered carriers, said: “This is really positive news that will help support regional connectivity, level up the UK, and provide a welcome measure of relief to domestic carriers facing an existential threat from the impacts of COVID. It will help to sustain current domestic connections – including into Heathrow, our national hub, as well as all the regions of the UK – which is essential to achieving economic growth and supporting the Government’s Global Britain agenda. We look forward to working further with the Hendy Review and Ministers and would urge as much speed as possible in the consultation process.”
Airport Operators Association chief executive Karen Dee added: “Domestic aviation suffered a double-hit in the last year, with the collapse of Flybe and the Covid-19 pandemic, and this offers a glimmer of hope for the future.”
Also welcoming the move was General Secretary of pilots’ association BALPA, Brian Strutton. He said: “It is important that domestic connectivity is reinvigorated post-Covid as this is something which can really help power our economic recovery. This is especially important given the collapse of Flybe and its extensive UK route network last year.”
“The double taxation of domestic flights is an anomaly which is a real barrier to new routes being established and new connections being made between the regions and nations of the UK.”
Transport strategy – a “devolve and forget” approach
Writing in the Daily Telegraph, Boris Johnson wrote that the lack of a UK-wide transport strategy had led to “inadequate connections” between the UK’s four nations. “For far too long, we have tended to carve up the country through a devolve and forget approach.”
At present, passengers taking a return flight from one UK airport to another, pay APD on both legs of their journey, but if they fly abroad, they only pay APD on one part of their trip. Johnson wrote that any reduction in APD on domestic tax would help bring more parity to a tax anomoly. “It seems wrong that someone flying from Belfast to London and back pays more UK tax than someone flying from Dublin to London and back,” he explained.
But environmental groups have argued reductions in APD would make it more difficult for the UK to meet its target of net-zero carbon emissions by 2050. They say the government shouldn’t be cutting any taxes on flights with the UK gearing up to host the COP26 UN Climate Summit in November. Ministers are promising to balance out any cuts in APD on domestic flights with an increase in APD on foreign flights.
The review will also explore increasing the number of international distance bands. Currently, there bands cover flights of up to 2,000 miles with a second band in excess of this total. Duty is charged on each passenger at the rate applied to their end destination.
The Department of Transport has pledged to continue with plans to decarbonise domestic aviation “as part of our ambition to reach net zero, including through mandating the use of sustainable aviation fuels.”
The consultation on cutting APD for domestic flights will be launched in the next three months.