Cost of family holiday to rise

By David Millward, Transport Editor

However, the plans, contained in a consultation which closes on Friday would bring down the price of long-distance travel.

The options outlined by the Government include cutting down the number of APD bands from the current four to two or three.

But in doing so this could push up APD on European flights from £12 to £16 - increasing the tax for a family of four by £16 assuming they flew economy class.

The biggest winners under the reforms, would be business class passengers flying to the furthest flung destinations such as Singapore and Australia.

Assuming that APD rises in November in line with inflation, the existing arrangements would see this group of passengers facing a tax bill of £186.

The proposed reforms could bring that bill down to as little as £150, if the Government goes for the “two band” option which would see the same higher rate levied on all flights over 2,000 miles.

This has already triggered a rift between airlines. “The Government’s proposals on APD would see hard working families subsidising long haul business class travellers.” said an easyJet spokesman.

“Bailing out the banks is one thing, but subsidising bankers’ long haul business class travel is quite another.

“If the Government presses ahead it will be a poll tax with wings.”

But Julie Southern, Virgin Atlantic’s Chief Commercial Officer, rounded on the budget carriers.

“It is a bit rich for the supposed low-cost airlines to complain about tax increases of £4 at most for their passengers, when somecharge three times that amount to book flights using a Debit Card.”

"Historically the rises in this tax, both in percentage and absolute terms, have been much higher for long haul flights than for short haul. If the Government spares the traveling public and decides to take the same level of revenue from this tax, we strongly believe the burden should be shared more fairly.

Other proposals contained in the review include extending APD to business jets, which are currently exempt from the tax.

However it has ruled out applying the levy to transit passengers, because this would mean somebody flying from a provincial airport and changing planes at Heathrow would be taxed twice.

The Government is also understood to have ruled out switching to a per plane tax, which would encourage airlines to avoid flying empty aircraft, after being advised that this would be illegal.

In addition ministers, while accepting that APD is a revenue raising measure, are looking to ease the burden on passengers by broadening the tax base.

Air Passenger Duty is expected to raise £2.5 billion in the current financial year, rising to £3.3 billion in 2014-15.

The figures are based on an assumption that passenger demand will rise and the tax rising in line with inflation.

British holidaymakers already face the highest aviation taxes in Europe and they will have to dig even deeper into their pockets next year when the European Union introduces an Emissions Trading Scheme.

The scheme will force airlines to pay for “carbon credits” if they exceed their emissions threshold and could add as much as £10 to the price of a transatlantic flight when it is introduced next year. Telegraph