The UK now levies the highest taxes on flying in the world. In less than 20 years the tax (Air Passenger Duty or “APD”) has risen from £5 for flights within Europe and £10 for outside Europe to between £13 and £184 per person depending on distance and class of travel.

 In 2011-12, APD raised £2.6 billion – three times more than a decade ago, and seven times more than 1995-96, its first full year in operation

This tax is not just high; it is totally out of keeping with the international position.

Only six EU countries have an air passenger tax, and several, including Ireland, the Netherlands and Denmark, have recently reduced or abolished their tax due to the damaging economic effects

A study in the Netherlands found that annually their air passenger tax generated revenue of €300 million but cost the Dutch economy €1.3 billion. If APD has a comparable damaging effect on the UK economy, that would mean it costs Britain £12 billion a year.

There is some evidence that long distance airlines are discouraged from flying into the UK with many preferring to use Amsterdam for all or most of their flights. Air Asia (part owned by Virgin) specifically cited “exorbitant taxes” for their decision to cease operating UK routes.

The UK government is arguing that there is a need for more air capacity in the South East to facilitate an increase in direct flights, particularly from China, but they need to undertake a comprehensive analysis of APD to discover whether the tax has a net negative effect on growth and employment

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