Air Passenger Duty (APD)

06 June 2011

A consultation regarding proposals for the future structure of APD was issued following the UK budget statement on 23rd March. The deadline for consultation responses is 17th June 2011.

UK Treasury will review the consultation responses during summer 2011 and will amend the policy in light of the feedback, with changes due for implementation in April 2012.

The Federation will submit a response on behalf of all Members but would encourage those with additional cases to make them to the Treasury (see below).

APD is currently applied to all flights departing the UK and is structured into four bands:

Duty BandDestination distance from LondonReduced Rate (Economy Class)Standard Rate (Business/First Class)
A0 to 2,000 miles£12£24
B2,001 to 4,000 miles£60£120
C4,000 to 6,000 miles£75£150
DOver 6,000 miles£85£170

Only Bands A & B have direct relevance to Northern Ireland, the key economic and competitive challenge relates to Band B. The main purpose of the changes is to simplify APD. There are two main options for change:

Consultation Option 1
The first consultation option for a change in APD is a simple APD regime comprising two new tax bands and two classes of travel.

Consultation Option 2
The second consultation option is an APD regime comprising three distance tax bands and two classes of travel.

The Northern Ireland Issue
Unfortunately neither of these two options addresses the very specific geographic issue relating to Northern Ireland. It is our strong contention that, due to NI's dependence upon strong and sustainable air transport links, APD must not be looked at in isolation, but reviewed in conjunction with the "Rebalancing the NI Economy" consultation paper.

Northern Ireland is a peripheral region, situated on the western edge of the European continent and therefore the strongest possible range of air access is vital for the positive development of the regional economy. The issue of UK APD levels applying in Northern Ireland is compounding the challenge for us to grow and develop air access corridors to this region, all the more so when set alongside strong, proactive moves being undertaken by the Republic of Ireland Government to further bolster their comparatively strong air service network in order to assist further inward investment and tourism growth.

The dramatic economic downturn in the Republic of Ireland has resulted in the Irish Government taking decisive action in a bid to re-energise their economy, with one of the principal actions relating to the promotion and delivery of key direct air access channels and appropriate supporting ground infrastructure as a key foundation stone of the economic recovery process.

In light of this the Irish government has abolished their own Air Tax which was initially set at €10, latterly (01 March 2011) reduced to €3, and now in process of being eliminated altogether.

This leaves Northern Ireland in a uniquely difficult situation in UK terms, we have an imperative to develop the economy assisted by inward investment and tourism growth from GB, Europe and North America initially, but ultimately also from the developing "BRIC" economies.

For our region to be economically competitive within a relatively small island market we urgently need to assume local responsibility for the setting of our own APD levels, through devolution of this matter from London. This action would urgently enable us to address the enormous disparity regarding long haul services (notably North America, which is a critical present and future source of economic growth opportunity for NI, and where the present disparity is at its greatest).

It is frankly imperative that a process is put in place as a result of the present APD Consultation whereby, as a community, we are initially enabled to safeguard key air routes and subsequently broaden our reach in line with the requirement to re-balance the local economy.

To that end, we would encourage you to submit a response to the UK Government Air Passenger Duty consultation by Friday 17th June 2011.

For further details on the consultation:

Contact Details
Post Mail address (email above is preferable): APD Consultation 2/N1 HM Treasury 1 Horse Guards Road London SW1A 2HQ

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