Business travel industry associations in the UK have reacted to the government’s decision to increase Air Passenger Duty.
Chancellor Jeremy Hunt announced a hike in the tax paid for those on “non-economy flights”, such as business class and first class as part of his 2024 Budget.
“I will make a one-off adjustment to rates of Air Passenger Duty (APD) on non-economy flights only to account for high inflation in recent years,” the Chancellor told the House of Commons, 6 March. Business class passengers currently pay from £13 APD for domestic flights up to £200 on the longest international journeys. APD raises a total of £3.8bn a year for the Treasury.
For those heading abroad on budget airlines such as Ryanair, easyJet and Wizz Air, the amount of APD paid in each fare is not set to increase.
Ian Sinderson, CEO at Travel Management Company ATPI. said that, at a time when business class tickets were finally climbing back to their highest demand since the pandemic, the decision could only hamper the stuttering recovery of the business travel industry.
“ATPI urges the government to stop treating the travel industry as a bottomless pit of potential taxation and, instead, create a more competitive market for airlines and travellers, in line with the prices enjoyed by our European neighbours,” Sinderson said.
“British businesses have faced significant headwinds post-pandemic, leading to a cut in business travel spend and slow business travel industry recovery, which is estimated to make up 1% of the UK’s GDP. Increasing APD in the UK for business travellers – which already sees some of the highest APD rates in the world – may force more travellers to opt for economy tickets or forego travelling for business altogether, which would be catastrophic for this recovering industry.”
Clive Wratten (pictured), CEO of the Business Travel Association (BTA) also reacted to the Budget announcement, saying: “The introduction of an increase in non-economy Air Passenger Duty is disastrous for the economic welfare and wellbeing of British businesses and their employees.
“Contrary to common misconceptions, business travel is not just for the wealthy. This tax will hinder growth for small and medium enterprises through limiting international collaboration opportunities. It will hit charities, academics and researchers alongside businesses of all sizes combatting rising costs in every area.
“There is no mechanism for ensuring that the monies from this tax will go into innovation in the airline sector nor into Sustainable Aviation Fuels. This is, therefore, just another tax on British businesses.”
Simon Richards, finance director of industry association beam, said: “The Chancellor’s Spring Statement was very disappointing to our members as it offered no direct benefit to the meetings industry.
“We welcome the freeze on alcohol duty and all working people will benefit from the cut in National Insurance. However, to maintain the world class standards for which the British meetings industry is renowned globally, we need help to invest in people. Sadly there was none.”
Kerrin MacPhie, CEO of the mia, added: “The announced one-off adjustment to Air Passenger Duty on business class tickets will make hosting business meetings and events in the UK less attractive for international events. While we understand the notion that this will boost government revenue to fund tax cuts, UK government must recognise the fierce competition we’re facing from overseas destinations and venues.”
She also noted: “Orchestras, museums, galleries and theatres will all benefit from a permanent 45% tax relief for touring productions, as well as 40% relief for non-touring productions. Business meetings and events are often huge productions, so it disappointing that similar relief hasn’t been considered for the sector. International congresses such as the large medical association events or even the annual party political conferences contribute massively to regional communities, however fail to receive any recognition once again.”
The mia chief executive was more optimistic on the question of economic growth, however, saying: “It is welcome news that the economy is expected to grow by 0.8% this year and 1.9% in 2025 and suggests we have turned a corner. Our latest research suggests similar growth forecasts within the sector, so we are optimistic that we will see some welcome stability over the next couple of years.”
