New APD bands ‘a step in right direction’
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Travel companies only partially accepted news of a change in the Air Passenger Duty (APD) banding announced today by George Osborne.
In his annual Budget update Osborne made the surprise announcement that all long-haul flights will be banded under one cost, meaning particularly good news for the Caribbean tourism industry.
It means from April next year the region will see a reduction of APD on flights which is currently higher than other destinations, while routes to countries such as China and India will also benefit from a reduction in the tax.
In the new system, which will take effect in April 2015, Band A will cover flights less than 2,000 miles from London and Band B will cover long-haul flights of more than 2,000 miles from London.
The reduction is expected to save customers more than GBP200 million a year and is expected to help both inbound and outbound travel.
Echoing many of the comments made from the industry, a statement from Virgin Atlantic said: “A two-band APD rate is a very welcome simplification to remove some of the biggest distortions of the current system, which the Chancellor himself admitted is crazy and unjust. The government has rightly recognised the damage APD is having on exporters and the travelling public alike. A tax system which penalised high growth emerging economies such as China and India was always contrary to the government’s stated policy on trade and exports, so this is a positive step that recognises the impact of this economically damaging tax.”
Yet many comments then involved a ‘but’ encouraging the government to take the measures further by scrapping the tax altogether or switching to other methods.
Virgin’s statement added: “There is a growing body of evidence demonstrating the huge economic benefits to the UK of reducing or abolishing APD and we hope that the Government will continue to go further in the long run.”
While Naren Shaam, CEO of comparison website GoEuro suggested: “If the Government was to adopt a more nuanced approach to taxing air travel, perhaps by capping the amount charged per flight, it would boost the economy even more and help alleviate some of the squeeze on family budgets.”
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