Osborne helps air passengers and car drivers
LONG-HAUL flyers got a surprise tax cut yesterday as the chancellor flattened air passenger duty (APD) rates.
In a move explicitly aimed at flights to and from South Asia and other fast-growing economies, George Osborne cut the rate for all flights over 2,000 miles to as little as £67 for an economy class ticket.
The change from April 2015 irons out distortions that saw flights to Hawaii taxed less than Caribbean trips. APD currently costs up to £94 in economy class and £188 elsewhere.
Travel groups including ABTA and the Airport Operators Association hailed the move. But British Airways derided it as “window dressing”, and called for APD to be axed.
James Stamp at KPMG said the new rate will cut just £64 from a family of four’s £4,000 return trip to Beijing. The change will cost the Treasury £920m in forgone revenues by 2019.
Travellers on private jets will be hit with charges six times the economy rate, which charter firm Hangar8 said is “not welcome, but it will have no impact on the industry”.
Osborne also set aside £20m for two more years of the regional air connectivity fund, which helps airports outside London set up new routes, and unveiled a £65,000 a year grant for air ambulances, funded from the Libor fines.