Air Passenger Duty (APD) is a tax imposed by the UK government on all passengers flying out of the UK. Although a number of countries impose a similar tax, the UK’s APD is substantially higher – with the current rates meaning that a family of four flying to Malaga will pay £52 extra on the price of their tickets. This rises to £260 for the same family to fly to Florida and £368 to fly to Australia.
Evidence from the airline industry and some long haul destinations suggests that APD is having a detrimental effect on Travel & Tourism around the world as well as the economy of the UK. In early 2012, WTTC undertook research to understand the economic impact of APD on the UK’s GDP and employment. The research indicated that the impact is significant and that removing Air Passenger Duty would result in an additional 91,000 British jobs being created and £4.2 billion added to the economy in 12 months.
The research was carried out by Oxford Economics using WTTC’s Travel & Tourism economic impact models for the UK and price elasticity data from IATA and the UK Department for Transport.
Following the announcement in the November 2011 Budget Statement by the UK Chancellor that planned, above inflation, Air Passenger Duty rises would go ahead in March 2012, the World Travel & Tourism Council (WTTC) commissioned Oxford Economics to undertake an assessment of the impact of the tax on the UK economy – namely the benefits to GDP and jobs if the tax were abolished.