The government has today kicked off its consultation on reforming the air passenger duty (APD) tax regime as part of its so-called “tax day”.
Ministers are looking to change the current structure of the tax to improve intra-UK travel links without compromising its 2050 net zero emissions targets.
As was previously announced, it will consider cutting the current rate of APD on domestic flights from the current minimum of £13 per short-haul flight.
To achieve this, the Treasury is also mulling the reintroduction of an APD exemption for the return leg of a domestic return flight, though it warned such a step could give rise to “administrative complexities”.
A second short-haul option would see an entirely new domestic band introduced for travel between UK airports.
For long-haul, on the other hand, it said that it would consider increasing the number of tax bands for different distances.
This, the Treasury said, would help “align the tax more closely with the government’s environmental objectives and to help fund any reduction in domestic APD”.
At the moment, there is a single long-haul rate of £84 per person for flights longer than 2,000 miles.
It said that one possibility could be a return to a previous structure in which there were four bands: 0-2,000 miles; 2,000- 4,000 miles, 4,000-6,000 miles and 6,000 miles plus.
Alternatively, it said it could seek to introduce three international distance bands at the following distances: 0-2,000 miles; 2,000-5,500 miles; and 5,500 miles plus.
The revelation that the government was mulling cutting the tax met with a polarised response when it was first made known earlier this month.
Airlines, who have long objected to the tax and have made it a frequent target over the last 12 months, welcomed the step.
Airport Operators’ Association chief exec Karen Dee said it offered the sector “a glimmer of hope for the future.”
But environmental groups hammered the call, saying it made a “mockery” of the UK’s climate commitments.
APD is the aviation industry’s primary contribution to Treasury tax receipts, raising £3.6bn in 2019-2020.