Air passenger duty is a tax paid by airlines which is typically passed onto their customers within ticket costs. It is banded on the distance from London to countries’ capital cities, with a reduced rate for economy class passengers.
At Budget 2014, the Government announced a significant reform to air passenger duty to bring the cost of long-haul travel down to a uniform duty rate. From 1 April 2015 any country over 2,000 miles from London will fall into the same B rate banding as the USA. The abolition of duty bands C and D underlines the Government’s commitment to export-led growth, and will help businesses to strengthen links with key growth markets like Brazil, India and China, through lower air ticket costs.
This reform offers a fiscally responsible approach that will be beneficial to economic growth, but ensures that the Government continues to prioritise restoring the public finances to a sustainable footing.
The vast majority of passengers, around 80 per cent, fly to band A destinations within the UK and Europe. The economy flight duty rate for these journeys is set to remain at £13. By the end of March 2016 it will have stood unchanged at this level for four years.