Passengers flying out of the UK face higher ticket prices due to changes to flight duty announced in the budget, prompting Heathrow to criticise the failure to boost the airline industry.
Chancellor Jeremy Hunt announced a “one-off adjustment” in rates of air passenger duty (APD) for premium economy, business class and first class tickets, saying the measure will “account for high inflation in recent years”.
However, the Treasury also plans to raise APD in line with the Retail Prices Index measure of inflation for all outbound UK flights from the 2025/26 financial year – which will affect even the cheapest economy class tickets.
The so-called “stealth tax” is expected to generate £110 million in revenue in the first 12 months.
Separately, the budget did not include the return of VAT-free shopping for tourists – something Heathrow, Europe’s busiest airport, and many other retailers have campaigned for.
Heathrow’s Chief of Staff and Carbon, Nigel Milton, told The National the budget represented a “missed opportunity”.
The airport recently announced it is back in the black for the first time since before the Covid pandemic ravaged global air travel, making £38 million in pre-tax profits last year.
“Instead of firing up the engines so British businesses can compete internationally, we risk falling behind as our competitors race ahead,” said Mr Milton.
He added: “The UK needs to lead the way on becoming producers and exporters of sustainable aviation fuel, encourage travellers to the UK with tax-free shopping and prioritise an economic regulation system that promotes inward investment.
“Instead, the government chooses to raise taxes on aviation, with no ring-fencing of funds to support aviation’s green transition. We understand the tough backdrop the Chancellor faces but it’s frustrating to see short-sighted decisions being prioritised over policies that would deliver the growth and jobs the economy needs.”
Clive Wratten, chief executive of the Business Travel Association industry body, called the hike “just another tax on British businesses”.
Tim Alderslade, chief executive of Airlines UK, the industry body representing UK-registered carriers, said: “The decision to increase APD goes against the Prime Minister's commitment not to discourage flying through taxation.
“Hitting passengers – including families and those travelling for leisure – with stealthy tax rises will only make the UK even less competitive on the global stage.”
He added: “The UK's aviation taxes and airport charges are already among the highest in the world.”
The UK budget - in pictures
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Jeremy Hunt, Chancellor of the Exchequer, leaves No 11 Downing Street to deliver his budget to Parliament in London. Getty Images -
Mr Hunt delivering his budget speech to the House of Commons. PA -
Mr Hunt makes his way out of No 11 Downing Street. AFP -
Mr Hunt presents his ministerial box to the media. PA -
Lucia Hunt, wife of Mr Hunt, with their children as he leaves 11 Downing Street. AFP -
Mr Hunt with his team outside No 11 Downing Street. AFP -
A 2p cut in national insurance was among expected new measures. Photo: HM Treasury -
Mr Hunt gets some exercise with his dog Poppy before his budget statement. Reuters -
Mr Hunt aims to have debt falling as a share of GDP by 2029. Photo: HM Treasury -
Mr Hunt holds a meeting in preparation for the budget in his office. Photo: HM Treasury
Airlines have also expressed their disappointment at the rise in charges.
A representative for Virgin Atlantic told The National the government has failed to acknowledge that by further increasing APD it is penalising “hardworking Brits”.
The airline said the APD paid on Virgin Atlantic flights is increasing from £194 to £216, representing a 12 per cent rise, which will pass straight to customers.
The Virgin representative added: “An increase to the standard rate of APD undermines the competitiveness of the UK economy, discouraging leisure travellers who have been crucial in aiding the industry’s recovery.”
Decades of flight: Heathrow through the years – in pictures
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Heathrow Airport in London, the UK's busiest, has been a travel hub for decades. Here The National takes a look back at Heathrow through the years. All photos: Getty Images -
An Airco De Havilland biplane of the British airline, Aircraft Transport and Travel Limited, about to leave on the company’s inaugural flight from Hounslow Heath Aerodrome, later known as Heathrow, to Le Bourget, Paris, in August 1919 -
Waterlogged runways at London Airport - Heathrow's original name - one week before it became Britain's main aerial gateway to the US in 1946 -
The new BOAC maintenance headquarters at London Airport circa 1955 -
The air traffic control room at the airport's new terminal in 1955 -
US film star Marilyn Monroe with her husband, playwright Arthur Miller, after arriving at the airport in July 1956 -
An aerial view showing the runways in 1958 -
The arrivals and departures board in 1960 -
A new airport gift shop, selling items by Chanel, Wedgwood and Pringle of Scotland, in 1961 -
The Queen's Building and the No. 1 Building Europa at Heathrow in 1965 -
The Beatles leave Heathrow for Salzburg in Austria, to resume filming of the movie Help!, in 1965 -
Passenger terminal gates at Heathrow in 1966 -
Keith Granville, managing director of BOAC, holding up a model of the Boeing 747 jet, with the new aircraft hangars under construction in the background, at Heathrow in 1969 -
An aerial view of Heathrow in 1970 -
Passengers boarding the first BOAC Jumbo Jet 747 used for a commercial flight, from London Heathrow to New York, in 1971 -
Passengers going through the departure lounge at Heathrow in 1973 -
Concorde takes off from Heathrow on her first commercial flight for British Airways in 1976 -
Men at work finalising the Heathrow Central underground station before its opening in 1977 -
Queen Elizabeth II passing though the Tube gates at Heathrow Central station on its opening in 1977 -
An aerial view of Heathrow in 1978 -
Passengers waiting near a departures board in 1979 -
Holidaymakers waiting in the departure lounge at Terminal 3 of Heathrow in 1981 -
British Airways employees protesting at Heathrow in 1984 -
Passengers and staff observe a silence in Heathrow's Terminal One to mark the beginning of the funeral of Diana, Princess of Wales, in 1997 -
Rower Steve Redgrave at Heathrow with daughters Sophie and Natalie and son Zak after returning from the Sydney 2000 Olympic Games with his gold medal -
Spectators watch the last Concorde land at Heathrow in 2003 -
Fans surround the coach carrying the England rugby team at Heathrow, as they arrived from Sydney after winning the World Cup in 2003 -
Heathrow's Terminal 2 in 2004 -
Passengers queue to check in at Terminal 1 of Heathrow Airport during the Christmas 2006 and New Year period -
Passengers wait at Terminal 1 on August 10, 2006, after airport security was raised to critical when a terrorist plot to blow up planes in mid-flight from the UK to the US was disrupted by police -
Planes queueing to take off at Heathrow in 2007 -
The new Terminal 5 at Heathrow in 2008 -
Aircraft at Heathrow Airport in front of the London skyline in 2016 -
Members of Team GB arrive from Rio de Janeiro at Heathrow, after returning from the 2016 Olympics, which saw Great Britain's strongest performance at the Games in over a century -
A composite photo shows planes taking off from Heathrow in November 2016. Forty-two planes were captured between 10.17am and 11.17am and a montage was created from those single images -
Items are arranged during an auction preview at Heathrow in 2018. The contents of Terminal 1, which closed in 2015, were being sold -
An airline passenger wearing a face mask pushes her bags through Heathrow's Terminal 5 during the coronavirus pandemic in 2020 -
British Airways employees welcome Olympians returning from the Tokyo Olympics in 2021 -
Travellers wait in a long queue to pass through the security check in 2022
