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11 Mar 2020

Budget 2020: air passenger duty increased despite coronavirus hitting airlines

Tax on long haul flights to rise in line with inflation

Despite speculation and calls from the travel industry, there's been little change to Air Passenger Duty (APD) in today's Budget.

With coronavirus negatively affecting many airlines, the travel industry had been heavily speculating that Chancellor of the Exchequer Rishi Sunak would cut APD by at least 50% by the end of the year.

Many airlines have been required to cancel flights to Italy and China. UK airline Flybe collapsed earlier this month, after a bailout plea was rejected.

Instead, APD on long-haul flights will rise in line with inflation (RPI) - for most flights by a few pounds from 1 April 2020. Airlines can pass this increase onto customers, subject to booking conditions.

The government has promised that a consultation to reform APD will take place this spring.

Here, Which? explains what's changing and how the move will affect the cost of your holiday.

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What is Air Passenger Duty?

Air Passenger Duty (APD) is a tax levied by the UK government on all outbound passenger flights from the UK.

It was launched in 1994 and while some claim it has environmental benefits by discouraging air travel, the estimated £3.7bn the Treasury raised from it in the last financial year suggests the government benefits too.

APD is charged at three rates and differs by short and long-haul.

Short-haul flights are those from the UK to a country with a capital city less than 2,000 miles from London. Long-haul flights are those at distances greater than this. Roughly, short-haul covers flights to most of Europe, some of North Africa and Greenland.

The three tiers of rates are:

  • Reduced - charged in the lowest class available (economy) with a seat pitch of less than 40 inches.
  • Standard - charged in any other class where seat pitches are more than 40 inches.
  • Higher - charged on planes carrying fewer than 19 passengers (typically private jets).

Here are the APD charges from 1 April 2020:

There is no APD charged on direct long-haul flights departing from Northern Ireland or flights from airports in the Scottish Highlands and Islands region.

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How will this change affect UK holidaymakers?

When you book a flight, the APD is already included in the cost of your ticket.

However, the government doesn't collect APD from airlines until after take-off. The small rise affecting long haul flights, in line with inflation (RPI), will have little impact on flight prices.

If you've already booked to fly after 1 April 2020, be aware that airlines can charge you the increase, even though you've already paid for it. Its booking terms and conditions should have made this clear when you booked.

The government is also consulting on reforms to APD this spring. It will consider the case for changing the APD treatment for domestic flights, such as reintroducing a return leg exemption, and for increasing the number of international distance bands.

Unsure of who you should fly with? See Which? Travel's guide to the best and worst-rated airlines.

Listen to the Which? Money Podcast about what £20 can get you in Europe's best value destination.

Will this affect climate change targets?

The UK government has committed to achieving net-zero carbon emissions by 2050.

However, in a letter to the government, ABTA - the travel association claims that: 'Air Passenger Duty does not incentivise cleaner, greener, practices by airlines or their passengers, and the revenues collected do not support the UK's transition away from carbon.'

This year's Budget included some changes designed to drive the UK 'towards a greener economy', such as tax on plastic packaging, plans to roll out more charging hubs for electric vehicles and a commitment to plant 30,000 hectares of trees in the next five years.

It remains to be seen how APD will change in light of this.

A recent Which? Travel investigation found that flying with British Airways can increase CO2 emissions by up to 45% per passenger.

Holidaymakers concerned about the impact of flying on the environment should consider taking direct flights because taking off is more carbon-intensive than cruising.

Passengers should also consider flying economy and packing light, as a heavier plane guzzles more fuel. For more tips see Which? Travel's guide to Carbon Offsetting.