01 November 2010
Air Passenger Duty increase
Rob Fisher

The air passenger duty is due to increase. It’s a rule that taxes like this always increase ("passengers now being asked to pay up to ten times more tax since APD’s introduction"), and always get more complicated:

The new APD places foreign destinations in bands, depending on how far they are away from the UK, increasing the amount of air tax paid as the distance increases.

That smells like a recipe for politicians to engineer their favoured outcomes.

However, the Caribbean is complaining that it has been unfairly hit after it was put in band C despite being only eight hours from the UK. Los Angeles in the USA is in the cheaper band B even though it is 12 hours away.

Malice, incompetence, or trade winds?

The current government wants to double the revenue it earns from aviation tax in the next four years from £28.9bn to more than £56bn. Of course, extra costs to airlines eventually find their way to customers too.

Back to the 70s we go: cheap air travel is doomed. When will the Laffer curve kick in?

Reading through the search results for “air passenger duty” on BBC News gives some sense of the inevitability of it all: Air passenger duty was invented in 1994, and in 2003 the greens were calling for it to be increased. In the 2004 budget it was frozen. There was constant clamouring to increase it, which finally happened in February 2007. Just one year later, MPs were calling for it to increase again. The current increases were planned by Alastair Darling shortly afterwards. The first of these happened this time last year.

Update: Tim Worstall says that airlines who complain that this tax is bad because it will dissuade people from flying are forgetting that this is the point of the tax. So I suppose airlines have to say something like, “dissuading people from flying is bad because the planet does not need saving”. For some reason large companies are reluctant to say such things.

Feedback

  1. Fly to Amsterdam, paying the British short haul tax for flying to Amsterdam. Change planes. Fly on to wherever you are going. Pay the Dutch tax, which I think is 0 euros. This is going to help British airlines and British airports no end.

    Until 1993, all flights from the Republic of Ireland to the United States were required to stop in Shannon, ie there were no direct flights permitted between Dublin and the US. It was just as stupid as it sounds, and a consequence a large portion of US-Ireland traffic went via London.

    Posted by Michael Jennings on  02 November 2010 at 01:20 am

  2. How about applying a multiplier on the tax whenever you fly, the first flight is minimal tax, the second 10x, the third 100x. That way the ordinary “one foreign holiday per year” bloke like me is happy and the tuscany villa owning journalist can gloat about how they’re more than happy to pay their carbon debt.

    Posted by Ian F4 on  05 November 2010 at 03:05 am

  3. With Emission fines and everyone waving their hands in an eco friendly society these taxes are credible. Doing business in an eco friendly environment can be costly especially if your creating so much pollution.

    Posted by Pallet Delivery on  11 November 2010 at 09:48 pm

  4. Tim Worstall has it bang on.

    Flying on commercial airlines has turned into such a farce of huge taxes, inconvenience and invasion of personal privacy, that when going to Europe, I’d sooner take the tunnel and drive. America remains another matter, of course, particularly when travelling to the West coast.

    I wonder how much further it has to go, for the politics and economics of flying, to make ship-based transatlantic travel preferable. If it happens, Californian companies may even feel the need to move their headquarters to places like Massachusetts.

    Posted by Dave Walker on  19 November 2010 at 01:01 am

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