Long-distance air passengers received good news in this week’s Budget, as major reforms and reductions to Air Passenger Duty (APD) were announced by the Chancellor. Local MP for Chelsea and Fulham Greg Hands, who has campaigned to reform APD for many years, has celebrated the news that from next year all long haul flights will carry the same lower band B tax rate that passengers currently pay to fly to the United States.
As announced in the Budget on Wednesday (19th March), the Government will reform air passenger duty (APD) by abolishing bands C and D from 1 April 2015. This will eliminate the two highest rates of APD charged on flights to countries over 4,000 miles from Britain, cutting tax for millions of passengers travelling to the Caribbean, Australia, India, New Zealand, China, South Africa, Brazil and many other Commonwealth destinations and emerging markets. This will mean that flights to South Asia and the Caribbean will pay tax at the lower band B rate. This will ease the cost of families travelling to and from long haul destinations. It will also help British businesses strengthen links with high growth markets, and to go further to make the UK an attractive option for business visitors and tourists.
Since 2009, Greg Hands has campaigned for reform of the APD system, and particularly to amend the banding structure of the tax, which has caused unfair anomalies in the rate, for instance where flights to the Caribbean were taxed more than those to California, as it was calculated on distance between capital cites and the UK. Greg even tabled an amendment to Labour’s 2009 Budget which would have abolished APD, and spoke at length against the new bands.
Chelsea and Fulham is home to large numbers of residents with links to countries across the world, who will benefit from the new reduced rate when travelling to visit family or for business. This includes over 3,400 constituents from the Caribbean, 1,500 of Indian origin, and 1,500 of Chinese origin, as well as over 4,000 people whose origins are from other Asian countries. All these long-haul destinations will benefit from the scrapping of the two highest APD bands.
Welcoming the announcement, Greg Hands said: “I am delighted at this news, and it is something I have been pushing towards for five years. This measure contributes to the UK's growth opportunities by lowering the cost of travelling to many emerging market destinations such as China, India and Brazil. It will help people travel for business, as well as family holidays to destinations outside of Europe. Some of the biggest beneficiaries however will be regular travellers to family outside of Europe of which includes many thousands of my constituents.”
Additionally the Budget confirmed that APD rates for 2014-15 will rise in line with RPI from 1 April 2014 ending the above inflation hikes in APD introduced by the last Labour Government. The Conservative-led Government has also introduced APD on private jets for the first time, a tax which never existed under 13 year of Labour rule. The rates applying to private jets will be set at 6 times the level of rates applying to economy class.
The Government will also extend the scope of the existing Regional Air Connectivity Fund to include start-up aid for new routes from regional airports. This will make sure all parts of the UK country to see better links with the international markets of the future.