Business aviation to embrace Air Passenger Duty

By Adam Twidell
December 1, 2011

By Adam Twidell, CEO, PrivateFly.com The opinions expressed are his own.

The Chancellor shouldn’t drag his heels on the timings around APD for business jet flights in the UK

In Chancellor George Osborne’s Autumn statement (November, 29), he announced the extension of Air Passenger Duty (APD) to trips taken aboard business jets, effective from April 2013.

The extension of APD to business aviation was announced in the March 2011 Budget with many expecting it to come into operation in April 2012 alongside the increases in APD bands for airline passengers (the details of which will be announced imminently). Some commentators are seeing this as a delay.

The timings may be unclear but the Chancellor need not drag his heels. If APD is to be calculated the same way for private jet passengers as it is for airlines, it would add a relatively small increase to the costs of a private charter flight and would be unlikely to cause much alarm to passengers.

Currently, the duty applies to airline flights in bands according to both the distance of the journey and the class of seat. Average passenger payload is 2.8 per flight, so the impact on a return flight from London to Paris would be to increase the cost overall by 3.5 percent (£134.40 on a typical £3,900 return journey).

Following Tuesday’s announcement, I believe that two areas remain unclear:

  • If APD will be calculated the same way for business jet passengers – i.e. according to distance travelled and seat pitch. Should the Chancellor introduce a new APD band for private jet passengers, the reaction may be different.
  • There is likely to be an issue around the collection of APD from customers. Business jet flights are like taxis and flights departing from the UK can be operated by UK-based operators or by overseas operators whose aircraft happen to be here. UK operators will undoubtedly introduce robust processes to collect APD from passengers and pass this revenue to the Treasury, but who will ensure that overseas operators do the same on flights departing from the UK?

If those issues are solved, I believe the industry will embrace the change. Introducing APD for private jet flights will be another way of moving the sector forward and integrating with the travel industry as a whole. Other key areas of change are making business jet flights more widely available through travel agents and providing online aggregation and booking.

Private jet charter is increasingly being seen as a viable and comparable form of time-efficient travel, with two-thirds of European flights going where airlines don’t operate a direct service*; and offering optimal scheduling flexibility.

*Source: EUROCONTROL Air Traffic statistics

(Caption on blog landing page: Chief executives Steve Ridgeway of Virgin Atlantic, Carolyn McCall of easyJet, Willie Walsh of IAG and Michael O’Leary of Ryanair (L-R), calling on the British government to scrap Air Passenger Duty (APD), pose outside the London Stock Exchange in London November 17, 2011. REUTERS/Suzanne Plunkett)

 

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