Cost of flights to rise as Rishi Sunak prepares to raise air passenger duty

As Rishi Sunak plans to revamp air passenger duty in the next budget, travelers to destinations such as Australia, South Africa, and Japan will be paying more for their flights. This is to offset the environmental damage caused by long-haul flight.
After being accused of not backing Boris Johnson's net-zero pledges using sufficient resources, the chancellor wants to reaffirm his green credentials.

He will likely announce that the tax reform he proposed earlier in the year will be implemented, with a higher rate for long journeys.

Airlines pay air passenger duty (APD), which is a portion of the cost that they pass on to their customers.

The current charge is split into two groups: for destinations less than 2,000 miles and those greater than 2,000 miles. Business class passengers pay more. The maximum passenger charge is expected to increase to 554 in April.

The treasury published a consultation document along with the March budget. It offered several options to reform APD. The treasury preferred a new three-band structure with destinations over 6,000 miles facing the highest charges.

Domestic flights will also be subject to a lower rate. This move will be promoted as encouraging levelling up the Union and protecting it by fostering connectivity among the nations and regions. However, it may be controversial where there is viable public transport alternatives like train routes.

APD reforms will be rejected by environmentalists as too small to reduce the demand for polluting flight.

Instead, the New Economics Foundation (NEF), thinktank, has proposed a frequent flyer tax that would make regular air passengers more expensive for each additional flight they take within a year. NEF research has shown that 15% of passengers take 70% of their flights.

The summer saw ministers publish a strategy called "jet zero" that aims to reduce emissions from air travel. However, it is widely considered a more difficult task than cutting down on pollution from domestic energy or car travel.

Before the crucial Cop26 meeting opens next week in Glasgow, the government wants to show that it has a plan to reach its decarbonisation goals.

Sunak will present his budget to rebuild the economy and boost its resilience following the hard pandemic. However, he will likely acknowledge the challenges such as volatile energy prices and shortages.

In recent weeks, the chancellor also stated that he is concerned by the rising risk of inflation. Huw Pill, the Bank of England's chief economist, suggested that it could reach 5% within the next few months.

This could lead to consumers facing what Labour calls a cost-of-living crisis. Energy bills will rise, national insurance premiums will rise in April, and universal credit will be cut by 1,000 per year for millions of low income families.

Treasury sources deny reports that there was a VAT reduction on domestic fuel bills in order to help families deal with the rising costs of heating their homes. However, the chancellor may opt for more targeted measures to offset the impact for some households.