21 MARCH 2011

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Article from BTNews 21 MARCH 2011

COMMENT: The UK Budget

About half of AERBT readers will be directly affected by what the British Chancellor of the Exchequer has to say next Wednesday (23 March) when he addresses Parliament with his Budget plans for 2011.  APD (Air Passenger Duty) is bound to be mentioned. 

About 50% of readers are resident in the UK.  We don’t have numbers on AERBT regulars from abroad who travel to and from this country but it is probably another 25%.  AERBT has about 80,000 readers per week.  APD will affect 75% of them!

Let us hope that having been nearly 12 months (May 2010) in office the Coalition would have seen what a commercially disastrous tax APD is (and at least Government has admitted it is nothing to do with environment), a real incentive for travellers to bypass the United Kingdom and its airports.

Just in case you are not aware APD was introduced by the then Chancellor Kenneth Clark in 1994 starting at £5.  It was doubled by Gordon Brown in February 2007, increased again in November 2009 and yet once more in 2010.  Travellers on private jets do not pay a departure tax at all.  The increasingly popular Premium Economy product offered now by most airlines is subject to the same rate of tax as First Class. 

If you are offered a “space available” upgrade you have to pay the tax, but if you are upgraded due to overbooking by the airline you don’t!  As far as we know Her Majesty’s’ Treasury has not yet resorted to men in brown raincoats booking seats and then marching through the cabin demanding to see how much APD you have paid.

The tax is deduced by distance flown from London to the capital of the country concerned.  Taking the US for example, Washington is 3,662 miles from London, Boston 3,265 and Honolulu 7,223.  You pay £60 and £120 depending on class of travel to any American city.  Hawaii wins on flight value!

For Bermuda at 3,440 miles you are in the US band, but once south of Miami it is the next area.  A two-centre holiday works out well starting in Florida.   The tax has been disastrous for the Caribbean holiday islands!

Both Tel Aviv (2,200 miles) and Nicosia (2,007 miles) come into the same band (2,000-4,000 miles – as USA), but with Athens the tax is just £12 and £24.  Turkey likewise is a winner, with Ankara the capital 1,750 miles from London.

Travellers to the Queen’s domain of Australia donate £85/£170 to the UK government.  If you want a greater form of comfort for the 26-hour journey and are prepared to pay for Premium Economy with a 2+2 family (any youngsters benefiting from an airline seat discount), the tax is £680.  Better to take a cheap ticket to a European gateway and pick up your long haul service at that point.  You can fly back direct at no extra cost.  You may well take a foreign airline too, of no advantage to Great Britain Ltd.

Where the tax has had little effect is for travellers who plan to come to the UK for a visit and then take the train (tax free) or a flight to a Continental point.  Tell your friends planning a European vacation to visit these islands first.

How the British APD is to be incorporated in the EU Emissions Trading Scheme for 2012 is yet to be seen.  Likewise whether this will impose a further tax.

Airlines and airports, plus big business and the leisure industry have been lobbying the Government hard on the question of APD.  Sadly there is no real leader for this disparity assemblage to robustly put forward views.  More is the pity.  A spokesman of consequence is urgently needed. 

On Wednesday we shall see the results of the efforts. 

Note: All the mileage figures are taken from the OAG Flight Guide) 

Malcolm Ginsberg
Editor in Chief

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