Page last updated at 13:53 GMT, Tuesday, 25 November 2008

Air travel tax proves controversial

By Tom Symonds
Transport correspondent, BBC News

Airline passengers
The changes mean that you pay more tax the further you fly.

Times are hard in the aviation industry, so the chancellor's foray into taxes on air travel was bound to be controversial.

Alistair Darling had been considering a major reform of Air Passenger Duty (APD) but industry insiders say the more modest changes announced in Monday's pre-Budget report "make a bad situation worse".

Aviation is a lightly-taxed business, so even small changes can have a big impact.

Mr Darling had signalled that he would replace the duty on air passengers with a tax per flight.

The industry liked that idea.

Airlines would still have passed the cost on to passengers, but they said it would have positive environmental benefits.

Consider, for example, an almost empty flight. To be discouraged.

But under the current rules, no APD is paid for the empty seats.

Under a per-plane tax, it makes no difference how many passengers are flying, the same tax is payable.

The airlines say this approach more closely reflects the fact that it is the flight that has the environmental impact, not the passengers.

Green tinge

Instead, APD has been 'tweaked' based on how far passengers fly.

This introduces a greener tinge to the tax, in that it discourages passengers from taking longer, more polluting flights.

So fly from London to most of Europe, the western edge of Russia, or North Africa and you remain within a 2,000 mile radius, and pay 11 in economy or 22 in the posh classes.

Most of the American east coast, Pakistan, Afghanistan and equatorial Africa are within the next band, which will cost 45 (economy) and 90 (business class) in tax.

For the US west coast the tax is 50 and 100 respectively. Australia - more than 6,000 miles away, would be 55 or 110 under the new system.

These figures are higher than last year's APD and are due to rise further in 2010.

'Tax planes not people'

So why did the government not reform APD?

It would be too disruptive, according to the pre-Budget report.

It also avoids hitting freight flights, which continue to escape the tax. This is viewed as a helping hand for struggling importers and exporters.

The response from some airlines was scathing.

Easyjet has been at the forefront of those calling for APD to be scrapped.

"All parties agreed that APD needed to be changed to a tax on planes not people, but now the Government has succeeded in bodging-up the reform of an already bodged tax," said Easyjet chief executive, Andy Harrison.

"He has made a bad situation worse by increasing the burden of APD on hard working families."

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