Air Passenger Duty – What is it, and How Does it Affect Your Holiday?

Written by Andy

When you fly from a UK airport to anywhere in the world, you will automatically pay Air Passenger Duty (APD). What was in 1994 an extra £10 tax on long-haul flying has soared to, in some cases, an up to an extra £188 per seat.

The UK government makes £2.8 billion from the tax every year – a measure they deem necessary, but one which is increasingly being called into question by airlines, foreign tourist boards and passengers. Many believe that the economy would actually be better served by reducing the tax – through jobs, GDP growth and inbound tourism.
We believe that this isn’t a matter that’s simply a concern for the aviation industry and government to sort out: this issues affects you, as the passenger stuck in the middle of it all. We have therefore written a guide that will tell you how much you are likely to pay on your next flight, ways you could be saving despite the tax and what you can do to make your voice heard on the issue. In this guide, we aim to help you answer these questions, and more:


How is Air Passenger Duty calculated?

Air Passenger Duty is levied on all flights departing from UK airports. The amount you will pay per person on top of a ticket depends on two things:

  • Which band your destination falls into. There are four in total (A,B,C or D), determined by how far your destination’s capital is from London: at 2,000 mile intervals, the price climbs higher
  • The class you’re travelling in – economy class rates can be substantially cheaper. Premium Economy and above is charged at the standard rate, and private aircraft have their own (substantially more expensive) rates


How much Air Passenger Duty will I pay?


As explained above, where you’re going and how you travel affects the amount of tax you will pay. You can travel as far as the north coast of Africa by paying just £13 for an economy class seat – but if you travel just a little further south you’ll have to pay over £50 more. Extra long haul flights (Australia, Argentina) involve a tax of £94 per person for economy travel – and travelling in comfort will be £166 per head. For a four person family, that could be anything up to £664 on the top of an already expensive set of tickets.

The graphic breaks down how much tax you’re paying to fly, until 31 March 2014:

AirPassengerDutyWorldMap

Not sure which band your destination falls under? Have a look at Appendix 1 – Destinations by band over at Hmrc.gov.uk (press Ctrl+F to search. If the country doesn’t appear, it is likely that it is in Band D).

When is Air Passenger Duty next due to rise?


Air Passenger Duty is subject to an annual rise, and short of treasury intervention, these will be the new rates from 1 April 2014:

AirPassengerDutyNextRise

Notable Quirks – How to travel 5,500 miles in Band B


Because the bands are determined by how close a country’s capital is to our own, some destinations fall into cheaper bands than may be expected:

  • The most commonly cited example is the United States, which falls into Band B because Washington D.C. is less than 4,000 miles away. However, the west coast (e.g. Los Angeles) is around 5,500 miles away (Band C)
  • Hawaii is comfortably into Band D territory (approximately 7,200 miles away) but as it is legally part of the United States of America, it is considered to be in Band B. This is different to how the rules treat overseas territories (such as the Falkland Islands which falls into Band D)
  • Caribbean tourism has been heavily lobbying the UK government citing the above fact – Most of the Caribbean is only around 4,200 to 4,600 miles away from London – most of the US’ landmass is further away than this, but air travel to Caribbean destinations is still taxed with an extra £16 to £32 over US prices
  • Russia is so big that it is the only nation the UK government has elected to split in two. Nevertheless, the portion of Russia east of the Ural Mountains is taxed only as Band B. A city like Vladivostok (5,200 miles away) is treated as if it’s closer than neighbouring Band C countries like China and Japan
  • Smaller countries still give rise to quirks in the system. Southern Vietnam is further away from London than Cambodia, but because the capital, Hanoi, is in the north, the country edges into Band C

Thankfully, these quirks largely make your flights cheaper than you may expect. Nonetheless, they do undermine a sense of internal consistency in the tax.


How can I plan my holiday around Air Passenger Duty?


While we don’t believe that the existence of Air Passenger duty should get in the way of your quest to see the parts of the world that truly capture your imagination, you may consider actively avoiding the tax if:

  • You’re more concerned about visiting a particular region or climate than a specific country
  • You’re happy to put off going somewhere in a higher band in the hope that aviation industry lobbying will reduce charges in the future

Please note that the banding quirks we mentioned earlier don’t always have a lot to do with the actual cost of the flights. A flight to Hawaii is still going to cost you a similar amount to most flights to the other side of the world, regardless of the amount of money the UK government are taking.
Instead, we would generally recommend seeing whether neighbouring countries fall within different bands to see whether there’s likely to be any notable savings on your flight. Indeed, it may be worth considering taking a flight to one country, and crossing the border on locally booked transport. We’ve listed a few alternatives that some may consider:

  • Caribbean beach holiday alternatives – if all you’re after is sun and sand in a island locale, there are a number of subtropical destinations that may serve as a great alternative. The Azores and Canary islands are in Band A, and Bermuda is the closest you’ll be able to get to the Caribbean without paying for a Band C trip
  • African Safari holiday alternatives – Southern and eastern Africa are renowned for their safari experiences, but the vast majority of countries are in Band C. The one exception is Uganda, which proponents call “unspoiled” and “more authentic” than its neighbours, such as Kenya and Tanzania
  • South America – Brazil is the southernmost country still within Band C: Chile, Argentina and even the relatively northerly Peru are all in Band D
  • The Indian Subcontinent – Pakistan falls into Band B whereas India and Bangladesh are in Band C. Anyone considering a cultural tour of the region may want to consider travelling from Lahore into India via the bus and train services available.
  • South-East Asia – Cambodia is surrounded on all sides by Band C nations (Thailand, Laos, Vietnam), but is in Band D. Thailand additionally shares a border with Malaysia, and may therefore be the best option for travel around the region.


What can we do about Air Passenger Duty?


Changing your holiday plans to avoid APD isn’t a valid long-term tactic. If you are unhappy with the way you are being taxed, there are other ways of getting your voice heard:

  • Sign an E-petition. Currently, the most successful open petition currently has over 32,000 signatures – it has already received a response from the Government but needs a push to 100,000 signatures to be heard again. However, it suggests only the suspension of APD over school holidays
  • The existence of the epetitions site doesn’t mean that traditional means of contact with your government aren’t still open – consider contacting your MP to raise your concerns
  • Keep a close eye on Afairtaxonflying.org, a site where the aviation industry is coordinating its efforts

The sheer volume of petition signatures, letters to MPs and negative coverage in the national press is in some way disheartening: the current government seems set on maintaining and increasing Air Passenger Duty.

Nevertheless, though APD increases have been curated by all three of the main parties in the past, it’s important to remember that UK government elections are coming in 2015. The louder passengers shout about APD, the more likely that the issue will become part of party manifestos.

Air Passenger Duty timeline


AirPassengerDutyTimeline

November 1994 – Air Passenger Duty (APD) is introduced by Conservative chancellor Kenneth Clarke as a two band system. Passengers are charged £5 for travel within the UK and EEA, £10 for travelling elsewhere.

November 1997 – New Labour chancellor Gordon Brown doubles APD: passengers are now charged £10 for UK and EEA travel, and £20 for travel elsewhere.

April 2001 – Gordon Brown decides to restructure APD to introduce tiers based on the class traveled in: a reduced rate is introduced for economy travel. EEA travel gains a half-price reduced rate, but rest of world travel actually gains a doubled standard rate – a £40 tax.

Februrary 2007 – In his final year as Chancellor, Gordon Brown announces that APD is to double.

November 2009 – Alistair Darling introduces a four band system based on distance to a country’s capital city in 2000 mile bands.

April 2011 – George Osborne considers various paths of APD reform but ultimately rejects them and announces further price rises across all four bands

April 2012 – Now an annual event, further price rises come into effect.

April 2013 – Once again, prices rise. Additionally, the chancellor introduces a higher rate specifically to penalise private jets: aircrafts weighing more than 20 tonnes but having fewer than 19 seats.

April 2014 – Further rises have already been defined for the 2014/15 financial year:

[Source: BATA.uk.com, Hmrc.gov.uk and Abta.com]


APD Infographic

Air Passenger Duty Information – An infographic by the team at Air Passenger Duty Information by GoSimply

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One Response to “Air Passenger Duty – What is it, and How Does it Affect Your Holiday?”

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