LONDON (Reuters) - Britain’s aviation industry hit out at the government on Monday over its decision to increase a tax on long-haul flights, saying it made a mockery of the government’s ambition for a ‘Global Britain’ after it leaves the European Union.
British finance minister Philip Hammond said in his annual budget that Air Passenger Duty (APD) would be frozen for short-haul flights but would rise in line with inflation for long-haul.
The owner of British Airways, IAG (ICAG.L), said the tax hindered its efforts to fly to new trading markets.
“It’s ironic that this Brexit budget has undermined Britain’s global competitiveness by upping Air Passenger Duty, the world’s highest aviation tax, again,” IAG said.
“We want to offer more flights to key trading markets, like our European competitors, but APD stifles route development to new emerging markets. If Britain wants to compete on the global stage post Brexit, it should be scrapped now.”
IAG said British Airways passengers paid 682 million pounds ($874 million) in APD last year.
A spokeswoman for Virgin Atlantic said customers were already paying a levy that was twice that of any other EU nation, to leave the UK. “APD now accounts for more than a quarter of our lowest fare,” she said.
Hammond said short-haul APD rates for 2020-21 would not rise, remaining at the same level as they have been since 2012. For long-haul they will increase by 2 pounds, while the rates for those travelling in premium economy, business and first class will increase by 4 pounds.
Tim Alderslade, the head of industry body Airlines UK, said the planned tax increase sent the wrong signal. “APD is nothing but a tax on Global Britain,” he said in a statement.
($1 = 0.7808 pounds)
Reporting by Kate Holton, Editing by Paul Sandle