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Tax hike could add £50 to the cost of your family holiday

Bynewsmagzines

Mar 15, 2023
Tax hike could add £50 to the cost of your family holiday

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Britons flying abroad on family holidays this summer could see their trip hit by a rise of more than £50 thanks to taxes on fliers being upped in line with inflation.

Air Passenger Duty (APD) is now set to be raised by £11.47 per person – from £91 to £102.47 – on economy seats in long-haul flights to the likes of Thailand and Australia.

The tax will also be going up by £10.96 per person – from £87 to £97.96 – on economy class to medium-haul hotspots like Egypt, Cape Verde and the Caribbean.

However holidaymakers flying economy to short-haul destinations such as Greece, Spain and Italy will only see a much smaller increase of £1.64 – up from £13 to £14.64. And the rise on domestic flights will only be 82p – from £6.50 to £7.32.

But the rises come after Chancellor Jeremy Hunt decided not to intervene to save UK tourists from double-digit hikes in APD in today’s Budget, it is understood.

Government sources last night confirmed that the levy will rise with the RPI rate of inflation, which was more than 11 per cent for most of last year.

What are the new Air Passenger Duty costs?

Air Passenger Duty costs are set to rise in line with September’s RPI rate, which was 12.6 per cent. The levy is charged on flights taking off from a UK airport, meaning it is paid on outbound journeys but not inbound.

DOMESTIC

  • Due to be: £6.50pp
  • Now will be: £7.32pp
  • Rise: £0.82pp

SHORT HAUL (0 to 2,000 miles)

  • Due to be: £13.00pp
  • Now will be: £14.64pp
  • Rise: £1.64pp

MEDIUM HAUL (2,001 to 5,500 miles)

  • Due to be: £87.00pp
  • Now will be: £97.96pp
  • Rise: £10.96pp

LONG HAUL (over 5,500 miles)

  • Due to be: £91.00pp
  • Now will be: £102.47pp
  • Rise: £11.47pp

These are the increases if the rise in APD is pegged to the September 2022 RPI rate. While it is expected to be this month, it is possible that another month could be chosen – but even if so, most of last year was double digits so the increase would be similar. 

It is expected to rise in line with September’s RPI rate, which was 12.6 per cent.

From April 1, APD had been due to be charged at £87 per person per outbound flight in economy class to medium-haul hotspots.

But the forthcoming hike means that, pegged to September’s RPI rate, it would rise by £10.96.

For a family of five, this would increase the cost of a foreign holiday by more than £50. 

For a business-class seat the hike would be more than £20 per flier, or over £100 for a family of five.

Looking at flights from London Heathrow to Hurghada, travelling on the first two Saturdays in August, the current price is £713 per person return with EgyptAir in economy. 

But an APD rise of £10.96 would result in a new price of £723.96 if the full APD increase was passed onto the passenger. 

For ultra-long-haul destinations, such as Thailand, Australia, New Zealand and Hawaii, APD had been due to be charged at £91 per flier in economy class from April 1. 

But this would rise by £11.47 under the scheduled RPI hike. 

The current price for a return flight from London Heathrow to Sydney, travelling on the first two Saturdays in August, is £1,284 per person with Malaysia Airlines.

But an APD rise of £11.47 per person would result in a new price of £1295.47.

Holidaymakers to short-haul destinations will see an increase of £1.64 per person in economy.

This means those travelling from London Gatwick to Faro with easyJet, who are currently paying £210 for an economy return on the first two Saturdays in August, would see a new flight cost of £211.64.

As of April 1 the APD system will be overhauled, replacing the current two-band system with a three-tier scheme based on the distance being flown and amount of carbon emitted.

Chancellor Jeremy Hunt has decided not to intervene to save holidaymakers from double-digit hikes in Air Passenger Duty in today¿s Budget, it is understood

Chancellor Jeremy Hunt has decided not to intervene to save holidaymakers from double-digit hikes in Air Passenger Duty in today¿s Budget, it is understood

Chancellor Jeremy Hunt has decided not to intervene to save holidaymakers from double-digit hikes in Air Passenger Duty in today’s Budget, it is understood

Those flying up to 2,000 miles (Band A) will pay the least. They currently pay £13.

Those flying between 2,001 and 5,500 miles will pay the second-highest amount, and those travelling more than 5,500 miles will pay the most.

The levy is charged on flights taking off from a UK airport, meaning it is paid on outbound journeys but not inbound.

With the tax usually passed on to customers, airlines complain that the cost of flights departing from any UK airport will be ‘amongst the very highest in the world’. 

British Airways, Virgin Atlantic, Ryanair and easyJet are among opponents of the APD hike.

Passengers in a long queue at London Stansted Airport's border control in September last year

Passengers in a long queue at London Stansted Airport's border control in September last year

Passengers in a long queue at London Stansted Airport’s border control in September last year

They have been urging Mr Hunt to step in and shield fliers from soaring costs due to inflation in the same way the Government did with rail passengers, for whom fare increases were this year capped at 5.9 per cent – well below RPI.

They are frustrated that they face a heavier tax burden while their rivals in America are receiving substantial subsidies under US President Joe Biden’s Inflation Reduction Act. 

In a joint letter to Mr Hunt, airline bosses wrote: ‘When our competitors are providing such generous support to their aviation sectors, it makes no sense strategically to be increasing costs for UK airlines.

‘We consequently urge the Government to help to reduce the burden both on travellers and the sector and forestall any RPI rises that risk an outsized impact on our aviation sector, the competitiveness of UK airlines and the wider economy.’

Source: | This article originally belongs to Dailymail.co.uk

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