The rates for short-haul Air Passenger Duty (APD) were frozen in 2017 and 2018, which benefitted 80 per cent of passengers, including all British holidaymakers travelling to Europe and most of north Africa. Furthermore, it remains the case that children are exempted from APD providing they are travelling in economy class. Since APD is paid by the airlines but often passed on to customers, I welcome the fact that costs are being kept down for most British travellers.
APD rates increased in line with RPI 2021-22. Short haul rates remain frozen at £13, the rate for long haul economy will increase by £2, and the rates for those travelling in premium economy, business and first class will increase by £4. Those travelling long-haul by private jets will see the rate increase by £13.
Following a detailed consultation, I welcomed the Autumn Budget's announcement of APD reforms that will bolster UK air connectivity through a 50 per cent cut in domestic APD. This will make travel cheaper for around 9 million passengers in 2023-24, and benefit connectivity between Northern Ireland and Great Britain. These APD reforms further align with the UK's environmental objectives by adding a new ultra-long-haul distance band on flights over 5,500 miles or more.
You may be interested to know that there is no tax on commercial aviation fuel or VAT charged for airline tickets. Therefore, APD helps to ensure that the aviation sector plays its part in contributing towards general taxation. Due to these duties, the sector contributes more than £3 billion a year, funding that would otherwise have to be found elsewhere.
The reforms announced at the 2021 Autumn Budget apply across the UK except for the direct long-haul rates for Northern Ireland which are devolved.
In light of the impact of coronavirus on the airline industry, I have been in contact with ministerial colleagues regarding the suggestion to defer the planned increase in APD to make them aware of the strength of feeling on this issue. I will continue to have conversations with them on this matter.
The necessity to use an intermediary under the IOSS is understandably frustrating, and I would welcome a more open system for registration for those seeking to export to the EU. The use of intermediaries, which can often be expensive and act as a barrier to small enterprises, is not in the spirit of open trade which I support. Regrettably, the administration of the IOSS scheme is purely under the remit of European Union, and I am not aware of any plans for a mutual assistance agreement in this domain.
Finally, frequent flyers already pay more under the APD system, but I welcome recent consultation on aviation tax reform and look forward to the outcome of this consultation. An additional frequent flier levy would be complex to administer, could be difficult to implement, would pose data processing and privacy concerns, and could prove unfair for those with an essential need to fly frequently. I think it is therefore sensible to keep any changes within the context of the existing APD system.