Ministers revealed that the price of flights within the United Kingdom could be reduced right after Brexit as part of possible changes that would be made to the Air Passenger Duty.
At the moment, passengers that are flying in economy class originating from a UK airport on a short haul flight is charged £13 in APD. On internal flights, they also have to pay the same fee on the return flight.
The Government explained that under EU rules, they couldn’t exempt the return journey from the APD. However, ministers disclosed that Britain’s withdrawal could potentially change all that.
The potential change was welcomed but campaigners were adamant that the government should lessen APD for all flights to prove that the UK is “open for businesses as Brexit approaches.”
The move comes right after the Chancellor of the Exchequer, Philip Hammond, announced a “Lewis Hamilton tax” at the Budget in November. The said tax would see business class fliers and private jet owners deal with an increase on flying costs to pay for a freeze of the Air Passenger Duty (APD) for those travelling in economy.
Hammond revealed that the APD rates for both short and long haul economy flights would be frozen by April 2019.
A move to exempt the return leg of a domestic flight from APD would benefit families and workers.
Treasury Minister, Robert Jenrick, disclosed that an exemption is “under consideration” as he answered a question on APD lobbed by Tory MP Sir Hugo Swire during a Treasury questions at the House of Commons.
“As you say the Government is unable to exempt the return leg of a domestic flight.
“Of course as we leave the European Union that could change and the Treasury will keep that under consideration.
“But we certainly recognize the economic significance of regional airports like your own in Exeter and it is for that reason that we have kept short haul rates frozen since 2012 and of course in 2015 we took the significant step of exempting children.”
Jenrick added that APD provides a substantial contribution to Treasury funds, raking in an estimated £3billion a year.
A Fair Tax on Flying spokesman, Tim Cade, commented on the recent development, saying:
“It is encouraging that the new Minister has stated the Government could look at reducing domestic APD post Brexit, however we believe that he should look at reducing APD for all flights to demonstrate that the UK is open for businesses as Brexit approaches.
“APD is the highest of any form of aviation taxation in the EU and acts as a tax on consumers and on trade.
“UK businesses are being placed at a competitive disadvantage at the very time that we need to be reaching out to form the global trading relationships that are essential to our post Brexit future.”
Hammond’s call to freeze APD rates at the Budget was drew the ire of campaigners who deemed it a “missed opportunity” with the Government having been pressed to slash APD rates to make them at par with taxes levied in other European countries.
An analysis of the data in September of last year showed that business class fliers in Britain were shelling out millions more in tax than their counterparts on other parts of the continent.
Hammond’s plans would see short-haul APD rates for 2019/20 stay steady at the same level they have been at since 2012. The long-haul rate for economy passengers, meanwhile, will be frozen at 2018/19 rates while the tax applied to premium economy, business and first class would rise by £16 and £47 for those flying by private jet.
This means that people flying by way of private jets would be charged APD of up to
£515 and those flying premium economy, business and first class long haul would be charged £172.
Short haul rates would remain at £13 for economy class and £26 for business and first class, while the long-haul economy fee would also stay as it is at £78.