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Budget 2011: Reprieve for family holidays as Air Passenger Duty increase is delayed until April 2012
By Jo Tweedy and Matt Fortune
23rd March 2011
Families fearing another hike in the controversial Air Passenger Duty - which currently adds as much as £240 to a holiday for four people to Florida - were granted a reprieve in George Osborne's latest Budget after he announced a delay on increasing the tax further.
Osborne told the House of Commons passengers would not have to pay the increase - planned for November - until April 2012 due to 'hefty' rises in the tax last year.
The Chancellor appears to have bowed to pressure from the travel industry, which has campaigned heavily for the charges not to rise. APD has increased every year in line with inflation since 2007 and is already up to 8.5 times more than the European average.
At present, the duty adds £12 to the cost of an economy flight within Europe, £60 to the USA and £85 to Australia. Higher charges are applied to business and first-class tickets.
The announcement today could cost the Treasury around £150 million a year but could save a family of four around £4 on a trip to a European destination or as much as £36 on a long-haul flight to Australia.
Luxury and business travellers are likely to bear the brunt of the freeze. Osborne said he would impose APD on private jets, which, say travel industry experts, will help to offset the savings made to ordinary holidaymakers.
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Ahead of today's budget, some of the travel industry's biggest players including British Airways, Tui Travel and Thomas Cook, put their names on a letter to the chancellor demanding the tax remained stagnant.
Osborne also moved to reassure holiday companies and tourism authorities who have been calling for a restructuring of the way the levies are calculated.
Spearheaded by ABTA, The Travel Association, the 'Fair Tax on Flying' campaign has been lobbying to change the APD banding system, which is currently determined by the location of capital cities. It means that flying to the Caribbean costs more than it does to destinations which are further away such as Los Angeles or Hawaii.
Tourism authorities in the West Indies, a popular destination with British winter sun-seekers, are among those who have demanded that the government review the APD system.
Osborne said he would look to consult 'from today' on how to change the banding system 'which appeared to believe that the Caribbean was further away than California'.
Bob Atkinson, spokesperson for TravelSupermarket.com, said of the move:
'While we welcome the freezing of APD for the average person, it doesn’t affect how we compete in the global market for travellers both outbound and inbound.
'Competitively we are bad, very bad. It is widely acknowledged a family of four to Florida will pay £240 in tax but a French equivalent would pay about £15. As a measure of monies collected we are paying massively over to our government for the privilege of flying from the UK.'
The Airport Operators Association, a heavy opponent of APD increases, has warned that passengers could still face 'double taxation' as early as next year.
Darren Caplan, chief executive of the AOA, said: 'We of course welcome the fact that the chancellor has listened to submissions made by AOA members and others.
'However, the AOA would warn that passengers still face the prospect of "double taxation" and further increases in flying taxes when aviation enters the EU Emissions Trading Scheme in 2012.'