A freeze in Air Passenger Duty for economy passengers paid for by a hike in rates on premium class tickets announced in the Budget is no more than a “sleight of hand”.
The accusation was made by airline trade body Airlines UK following the change to APD from April 1, 2019, revealed by Chancellor Philip Hammond.
The government claimed that 99% of passengers will not see a rise in APD due to the freeze on fees paid by all economy passengers and all short-haul flights balanced by a rise for premium fares on long-haul routes.
However, Abta described the move on the air tax as a “missed opportunity” and vowed to maintain pressure for a cut in APD.
However, the travel association welcomed government plans to review consumer protection when airlines failure following the collapse of Monarch.
Airlines UK chief executive Tim Alderslade said: “The change announced on APD is simply a sleight of hand move by the Treasury.
“The total tax take from APD is not being cut – currently at £3.3 billion, it will hit £4 billion a year in 2022/23 and remains the highest in the world, and is far more than those levied by our competitors, especially in Europe.
“Increasing the long-haul premium rate, however tempting for the Chancellor, potentially threatens the viability of some long-haul services that rely on non-economy class passengers.
“It also doesn’t do anything for the UK’s ability to open up new links to emerging markets, in particular from regional airports where such services are in short supply or non-existent.
“Post-Brexit this will be more important than ever.”
Abta public affairs director Alan Wardle said: “We recognise there were tough decisions for the government in this Budget and freezing APD for leisure travellers is a welcome step forward.
“However, we believe this is a missed opportunity to decisively cut this tax. We will continue to have the highest levels of APD in Europe and amongst the highest in the world.
“We will continue to push for a substantial cut which will help travellers and ensure the UK is well placed to trade with the rest of the world post Brexit.”
Wardle added: “We are pleased the government also announced in the Budget that it is introducing an independent review into consumer protections when airlines fail and look forward to working closely with the review body.”
The Airport Operators Association already voiced disappointment that the Chancellor did not go further to address the competitive disadvantage high levels of APD create for the UK, a sentiment echoed by Glyn Jones, chief executive of Southend airport owner Stobart Aviation.
A review of tourism VAT in Northern Ireland was cautiously welcomed but industry bodies said more should be done.
British Hospitality Association chief executive Ufi Ibrahim said: “We welcome the Chancellor’s decision to press ahead with a review into cutting tourism VAT in Northern Ireland.
“This is the first time that tourism VAT has featured in a Budget and is a reflection of the hard work by the BHA and the Campaign to Cut Tourism VAT.
“We hope that the government will recognise the benefits of a cut to tourism VAT and we will continue to urge a nationwide reduction.”
Dermot King, chairman of ther Campaign to Cut Tourism VAT and managing director of Butlin’s, added: “We welcome the Chancellor’s decision to review tourism VAT in Northern Ireland.
“The Campaign to Cut Tourism VAT has been calling for such a review and we look forward to working with the Treasury as their report is produced.
“This is a clear victory for our campaign. However, across the UK, the rate of tourism VAT is one of the highest in Europe and we have long argued that cutting it would be good for jobs, the economy, the Treasury, and families wanting to holiday at home.
“We urge the government to be positive and cut this unfair tax across the country.”
Louise Goalen, chairman of the hotel booking agency trade association HBAA, voiced disappointment at the absence of specific measures to help the hospitality and meetings industry.
“Financial incentives or assistance for young people to train and to encourage talent in the hospitality and events sector are needed to help reduce youth unemployment and prepare for the declining number of EU workers coming here, a massive and vital resource for this sector,” she said.
“HBAA hoped that the Chancellor would address this in his Budget statement. While £20 million for further education colleges for T levels is good news, we need indexmore investment in hospitality sector training.
“We need to attract more young people to see the sector as a good career opportunity.
“Raising personal allowances and with it, the tax threshold is a step forward, but providing funds to encourage 16 to 19 year olds to train in the sector would have been a helpful initiative.
“While we welcome the review of tourism and APD taxation in Northern Ireland, we’re disappointed that the review doesn’t cover England, Scotland and Wales as well.
Following a business campaign led by the British Retail Consortium (BRC), the Chancellor’s has announced in his
The Budget announcement that business rate rises reflecting the Consumer Price Index rather than Retail Price Index will be brought forward by two years to 2018 was welcomed by the British Retail Consortium.
Chief executive Helen Dickinson said: “This is a hugely welcome and positive move. From being caught in a web of competing pressures from all parts of the economy, limiting the scope for action, it’s clear that the Chancellor has listened to the retail industry and the growing chorus from across business and commercial life who have spoken up in favour of action to mitigate rising rates bills.
“Crucially, this relief will unleash investment that retailers want to direct towards the needs of their customers.
“This will be particularly critical at a time when shoppers’ disposable income is being squeezed further and the growth projections for the economy have been downgraded.
“Introducing three yearly revaluations is also a positive move to improve fairness of the system.
“These are encouraging first steps, so now is the time to commit once and for all to putting the rates system on a more affordable and sustainable footing, to support local communities, shops and jobs. We are keen to work with government to deliver on that.”
Surinder Arora, founder and chairman of hotel company Arora Group which is proposing an alternative plan for expanding Heathrow, welcomed measures to bolster consumers’ available income, such as the increase to the income tax personal allowance and the raising of the higher tax band threshold, “which we would hope should support consumer spend on hospitality and travel”.
He said: “The buoyancy of these sectors is particularly important for us with our portfolio of hotels and assets surrounding airports in the south-east of England and our plans to play a significant role in the expansion of Heathrow airport.
“The Chancellor’s commitment to fund the development of construction skills across the country is reassuring, especially in light of the uncertainty surrounding free-movement of labour in relation to Brexit negotiations.
“I have previously stated publicly how dependent Heathrow and our hotel portfolio are on migration and Britain being open to global movement, and I would hope that this shall remain a key consideration when using the additional £3 billion set aside for Brexit contingency planning.”
UKinbound CEO Deirdre Wells said: “It’s encouraging to hear APD feature on the government’s agenda and that this tax on trade will be frozen on all short-haul and long-haul economy flights.
“We’re also pleased to hear that a review will be undertaken regarding the impact of APD and VAT on tourism in Northern Ireland.
“However, APD’s detrimental effect on businesses across England, Scotland and Wales should also be investigated.
“The government’s commitment to a Brexit ready Britain will be undermined if the review does not cover all four corners of the UK.”
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