Will APD go?

By | Category: Travel news

Over many years I have suggested that removing APD – Air Passenger Duty – was unlikely because the amount of revenue that it brought into the treasury.

Will the Flybe problem mean the end of domestic APD?

When the Scottish government had the opportunity to get rid of it as per their manifesto they conspicuously choose not to do so.

Beginning as an environmental tax it has little effect on reducing the wishes of Britons to take to the air and now is just another tax much like stamp duty or alcohol taxes. It has become too useful a n exchequer tool.

But now it appears that the British government is seriously looking at removing the tax albeit for just domestic flights. Removing the £13 tax is one of the ways that the government is considering as a way of helping Flybe survive. It appears the airline has a £100 million liability to the exchequer which, if APD was removed on domestic flights, could be deferred.

But removing the tax on just domestic flights would have a number of benefits other than easing the life of Flybe. (And other airlines that fly predominantly domestic routes such as  Eastern and Loganair.) It would remove some of the angst caused by devolving APD to Scotland and which worries airports if a similar right was given to the Senedd in Wales. The tax would then only apply to flights leaving the UK.

In this scenario, the tax lost to the exchequer would be considerably less than if the whole tax was removed. But as it is devolved, the Scottish government would presumably have to agree to the cut as well because it would lose a revenue stream. Is that insurmountable?

There is a precedent for tinkering with the tax because, in order to dissuade passengers from popping over the border to Dublin Airport yo save money, the goverment removed APD from Northern Irish long-haul flights making a more level playing field between the Republic and the North.

For passengers the removal of the tax would also reduce some fares but also remove the difficulty of claiming the tax back from an airline if you had to cancel or missed the flight. It would remove a little source of cash from some airlines because you can bet they don’t always pass it on to the government if a passenger misses a flight for any reason whatsoever and can’t be bothered to claim it back.

Today might reveal whether I have been wrong over the years and that the exchequer will agree to remove the tax without having a revenue source to replace it!

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