Angus Batey November 06, 2024

The British Business and General Aviation Association (BBGA) is seeking an “urgent” meeting with the UK government’s aviation minister following the announcement that the air passenger duty (APD) on long-range business-aviation flights will rise by 50% in 2026, and on plans to extend the highest rate to smaller business aircraft.

The BBGA was joined in criticism of the move by the Air Charter Association (ACA) and several organizations representing commercial airlines, airports and pilots. But the news was welcomed cautiously by Safe Landing, a group of aerospace professionals that campaigns for sector workers to lead aviation’s decarbonization transition. However, one brokerage said it was “unsurprised to see that private jets have been targeted” by the government and described the likely impact of the APD increases as “negligible.”

The BBGA has requested the meeting with UK Aviation Minister Mike Kane “to seek acknowledgement that business and general aviation is a recognized growth enabler” for the nation. The BBGA was responding to the announcement Oct. 30 made by Chancellor of the Exchequer Rachel Reeves, in her first budget statement to Parliament.

“The UK already charges the highest rate of APD in Europe, and this is one of the fastest growing of all UK taxes,” said Glenn Hogben, CEO of the ACA, which represents the private air charter industry. “Raising this tax further makes the UK increasingly uncompetitive as a destination and place to do business.
. . . Smaller charter operators, who are vital to the aviation sector, will face disproportionate challenges in adjusting to these changes. With tight margins and price-sensitive clients, they will struggle to maintain their business in the UK, which would result in the loss of jobs and revenue to UK business, and ultimately lower tax income.”

At least one charter broker, however, appears to disagree. In a blog post on its website, Fly Victor says the new rates—even if passed on in full to clients—will be unlikely to cause any to alter their travel plans. A customer booking a Bombardier Global 7500 to fly three people from Biggin Hill, London, to Kuala Lumpur, Malaysia, would see an increase of 1.8% in the APD, or £3,423 ($4,416) on top of a price of about £190,000 for the flight, according to Fly Victor. The company describes the increases as “very marginal.”

At present, the APD is charged at three rates—reduced, standard and higher—in distance-related pricing bands: 0-2,000 mi.; 2,001-5,500 mi.; and over 5,500 mi. Passengers in commercial airliners pay the reduced or standard rates, depending on seat pitch. Rates will increase for all three bands, but it is only the highest band that will see a 50% rise.

The higher rate was introduced in 2013, when the APD was first levied on what the British government calls “private jet” flights. This rate is
charged on flights by aircraft with a maximum takeoff weight (MTOW) of over 20 metric tons that seat 19 or fewer people. Presently, passengers on aircraft with MTOWs of 5.7-20 metric tons pay the APD at either the reduced or the standard rate. The APD on a flight on a qualifying “private jet” of over 5,500 km is £607 per passenger. Beginning April 1, that rises to £673, but from April 1, 2026—when the 50% increase takes effect—it will be £1,141.

The APD legislation defines a “private jet” in terms of MTOW and number of seats, and it applies only to fixed-wing aircraft. The consultation document proposes extending the higher rate to all qualifying aircraft of 5.7 metric tons MTOW or above and says the government intends to redefine a “private jet” flight as one where a ticket is not issued to a passenger and/or where the flight does not depart according to a published timetable.

The BBGA statement describes the consultation paper as “a real surprise” and argues that applying the highest APD rate to flights by smaller aircraft, the 5.7-metric-ton MTOW limit would bring aircraft such as the Beech King Air 350 into the regime. It “would be a major deterrent to business, coupled with all other post-Brexit regulations and costs our industry is facing.”

The consultation document describes the APD increase as being “aligned with the government’s environmental objectives,” but the Treasury acknowledges the APD “is not an environmental tax.” Funds raised from it are not earmarked to be spent only on decarbonization or aviation programs. The consultation does, however, appear to offer an opportunity for industry entities and professionals to influence government thinking on how policy affects the sector.

“An ideal policy will be as closely correlated to emissions, carbon and pollution as possible,” Safe Landing co-founder and former Rolls-Royce engineer Finlay Asher tells Aviation Week. “APD doesn’t focus on emissions; it’s just distance and class.”

A revised APD regime could start to provide incentives to passengers and fleet owners to choose lower-emission aircraft, rather than merely imposing additional costs, Asher argues.

“[One] way you could reform [APD] is looking at the carbon intensity,” he says. “So, if you fly in an [Airbus] A320ceo rather than a Neo, for the same distance you will pay more, because the Neo less efficient. [At present, for APD purposes] we don’t differentiate between a 30-year old aircraft versus a new-generation one, [but] a slow-flying turboprop is very different from a fast-flying, jet-powered Gulfstream.”

Ultimately, Asher says, changes to the APD regime will have limited effect unless they are part of a coherent and relevant overarching strategy that indicates a clear direction of travel to the industry.

“We need bold policies; [we] need the government to step in and set policies that direct the sector in the right way,” he says. “We’re really keen on [government setting out] a clear industrial strategy—for all the high-carbon sectors, but obviously for aviation—that’s realistic about what’s possible technologically, how much it’s going to cost and what the policies are going to be to support it. Industrial strategy needs to lead this discussion.”