New green tax will see air fares rise in 2012

22 December 2011

Holidaymakers face rising costs when a new EU green tax comes into effect on 1 January 2012.

Passengers flying to the US will have to pay an extra £21 as a result of the European Court of Justice's (ECJ) 'permit to pollute' charge on airlines. The ECJ is forcing all airlines that fly into EU airports to pay Air Passenger Duty (APD) and it is expected that airlines will pass on the cost to passengers. The charge has been introduced as part of the European Union's Emissions Trading Scheme, aimed at reducing levels of CO2 emissions from aircraft.

Non-EU countries, China, Canada and the US have challenged the Court's decision, claiming it is invalid because the ECJ isn't an international body.

The EU calculates that passengers will have to pay an extra £10.50 to fly, one-way, to the US. Costs will be considerably less for shorter flights: the EU expects it will cost passengers up to £1.75 each way.

Air passenger duty

On top of these increased costs, in his Autumn Statement Chancellor George Osborne announced that air passenger duty rates would go up from April 2012.

The current standard rate for band A flights (European destinations) will increase from £24 to £26 but long-haul passengers will feel the bite more with hikes of £14, from £170 to £184 on the duty for passengers flying to band D destinations, such as Australia.

That means from April a family of four flying to Australia will have to pay £374 in air passenger duty.

Mark Tanzer, chief executive officer of the Association of British Travel Agents (ABTA), claims the April increases will price some families out of flying. "APD is a tax on tourism and a tax on business travel. The Chancellor said he wants to support British companies and not tax them out of business or the global economy but his actions on flight taxes do not match his words," he adds.

"The Chancellor's decision is bad for jobs, bad for growth and bad for passengers – ABTA will continue to lobby against these damaging tax hikes."

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