The head of global airline association IATA has accused the UK government of a “short-sighed cash grab” after it announced plans to increase air passenger duty (APD) for some traveller types.
Delivering his latest Budget Statement on 6 March, UK chancellor of the exchequer Jeremy Hunt outlined plans for a “one-off” adjustment to APD rates for non-economy passengers “to account for inflation”, without detailing the exact rises involved.
This drew a strong response from IATA director general Willie Walsh, who is a former chief executive of British Airways and its parent company IAG.
“The prime minister has broken the pledge he made in September not to raise taxes on flying,” Walsh states.
“It’s a short-sighted cash-grab of a government that has run out of ideas, competence and basic integrity.”
The IATA chief was referencing a speech made by Rishi Sunak in September 2023, in which the UK prime minister claimed to have “scrapped” what he described as “new taxes to discourage flying or going on holiday”.
APD is not a new tax, so the government could argue it has not gone back on its word. Equally, however, it was not made clear what “new taxes” Sunak was referring to, given there were no government proposals in place on the topic at the time. Indeed, Sunak’s speech drew criticism from some sources because he claimed to have “scrapped” several things that were not close to becoming government policy.
Regardless, Walsh highlights the negative impact that higher passenger taxes might have on the UK economy.
“This damages business connectivity at a time when post-Brexit Britain is in desperate need of foreign investment and better trade links,” he states.
The airline industry’s resistance to the raising of taxes on flying is not an approach favoured by all stakeholders, however.
Non-government organisation Transport & Environment, for example, responded to Hunt’s announcement with a call for much higher taxes on the aviation sector.
“The aviation sector is massively undertaxed, and this long overdue change, which will come into effect in 2025, is the tax equivalent to rearranging the deck chairs on the Titanic,” says Matt Finch, UK policy manager of Transport & Environment UK.
“It’s baffling that the chancellor didn’t do this years ago,” Finch continues. “But it’s still completely unbelievable that airlines don’t pay a penny in fuel duty when you and I have to pay every time we fill our car up. Where’s the fairness in that?”
The current UK APD standard rates range from £13 ($16.54) for a domestic flight through to a charge of up to £200 for a flight of more than 5,500 miles.
