IN FOCUS
08 analysis
The rise and
rise of APD
This November, some will be celebrating
a rather high profile 15th birthday.
Some have called the teenager involved
‘out of control’ while others look at
the substantial money raised by this
resourceful youngster for good causes.
Yet this 15-year-old is not a person.
Air passenger duty (APD) was first
introduced in November 1994, under the
Conservative government of John Major.
In its first full year, APD raised
£343m. In 2007/08, the take from APD
had increased to nearly £2bn. But this
astonishing figure is not enough for
the government. To celebrate its 15th
birthday, the government has announced
that APD will be restructured, according
to new distance-based thresholds.
At the moment, APD is charged at
£10 in the European Economic Area,
£40 outside that area and double those
figures for any other class of travel. From
November, duty will increase to between
£11 and £110 in four-distance based
bands. The following November, on its
16th birthday, these levels will increase
substantially again. Someone travelling
in business or premium economy class
to Australia will then pay £170 on top of
their fare for the privilege.
The British Air Transport Association,
the UK aviation organisation, which
includes BA, Virgin Atlantic and bmi
among its members, reckons that the
new increases will raise an extra £720m
a year for government coffers.
The government, in the shape of
transport secretary Lord Adonis, says
that the primary purpose of APD is to
cover the “environmental impact of
aviation”. However, this near £3bn a
year is not ring-fenced, and much of the
money goes into the general tax pot,
contributing to general public services.
It is little wonder that Virgin Atlantic
president, Sir Richard Branson, says that
APD is “out of control”. Launching a new
anti-APD campaign recently, Branson
said: “Air Passenger Duty is one of the
connect magazine | september 2009
most unjust taxes out there. The UK
Government has been quietly increasing
APD by huge amounts and claiming it
is an environmental tax. Yet, there’s
not a shred of evidence to suggest the
£2bn+ currently raised is going towards
environmental or sustainable projects.”
The airline is putting anti-APD messages
on its e-tickets to campaign against rises.
Virgin is not the only organisation
to come out against the APD increases.
BATA, the GTMC, the Association of
British Travel Agents, UKinbound and
the Airport Operators Association have
all expressed their concern at a time
when the travel industry as a whole is
suffering from a fall-off in demand.
A petition set up on the Number
10 website campaigning against the
increases (http://petitions.number10.
gov.uk/APDIncrease/) has quickly gained
more than 7,000 signatories.
Commenting on industry reaction,
CWT’s executive vice president UK &
Ireland, Andrew Waller, says: “Couching
APD in environmental language makes
this tax seem more palatable, as few now
question the need to address climate
change – but without a tangible link
between the revenue this generates and
action on the environment, it is hard to
justify such increases.”
Inevitably, it will be the UK’s
companies that will have to bear these
increases. The economic downturn has
meant that the viability of many British
business names have been brought into
question. A couple of years ago, who
would have believed companies
such as Woolworth, MFI and Allied
Carpets would have failed. With UK plc
having to find another £750m a year
from its depleted reserves, other names
will surely follow.
YOUR CWT...
Have your say – register your
protest at http://petitions.
number10.gov.uk/APDIncrease/
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