Airlines and airports have reacted with dismay after pleas to adjust or abolish Air Passenger Duty were ignored by the Chancellor (pictured) in his Budget.
A policy paper from the treasury after Chancellor George Osborne’s eighth budget confirmed that the air tax on long-haul routes will increase again from April 1, 2017, from £73 to £75 and from £146 to £150, depending on the class of travel.
The proceeds will contribute to the government’s deficit reduction objectives.
Small firms will benefit from business rate cuts while others will gain from further reductions in corporation tax – but the Chancellor’s refusal to act on concerns about the impact of devolved APD grew strong industry criticism.
Abta said: “While short-haul APD will be frozen, Abta is disappointed that the Chancellor used today’s Budget to raise Band B APD by inflation, rather than to address the uncompetitive level of APD overall.
“With devolution of the tax to Scotland gathering pace, and the Scottish government committed to a forward-looking 50% APD cut, we need urgent action from the treasury to bring APD down across the whole of the country to ensure a competitive, fair rate.”
David Laws, Newcastle airport chief executive, commented: “We are disappointed that our concerns regarding devolution of APD to Scotland have not yet been addressed, as we are already seeing airline behaviour changing in response to the prospect of lower APD north of the border.
“Airlines are making plans for new flights from Scottish airports rather than airports in the north of England, so that in a sense we are suffering from ‘planning blight’.”
Jason Geall, American Express Global Business Travel vice president and general manager, said the Budget was positive from a travel and transport perspective because of planned investment in roads and railways.
But he added: “It was once again disappointing that the chancellor neglected to address APD.
“It now seems likely that MSPs will halve the tax north of the border when the Scotland Bill becomes law.
“This will create an unfair playing field, putting airports and airlines in the north of England at a severe competitive disadvantage.”
A spokesman for industry lobby group A Fair Tax on Flying commented: “[The] budget statement was a missed opportunity to cut this damaging tax.
“APD is being devolved to Scotland where the Scottish government is set to halve it.
“Families in Southampton or Swansea should not have to pay more tax to go on holiday than families in Stirling.”
Saad Hammad, Flybe chief executive, said: “If the chancellor needs the overall £3 billion levied through APD, then we urge him to raise it more fairly by cutting the charge to Scottish levels at regional airports and establishing a higher levy or ‘congestion charge’ at the congested airports in London such as Heathrow and Gatwick.”