The UK’s Air Passenger Duty (APD), often referred to as a “holiday tax,” is set to rise by 15% on most flights starting in April 2026, impacting families and the travel industry. This levy, added to flights departing from the UK, is typically passed on to passengers, increasing the cost of air travel. A study by the TaxPayers’ Alliance highlights that a family of four traveling to a long-haul destination like Disneyland Florida currently pays £408 in APD, a figure projected to rise to £424 after the increase. For even farther destinations like Australia, the cost will be £424, equating to £106 per person. This represents a significant jump from the initial APD rates introduced in 1994: a mere £5 for short-haul flights and £10 for long-haul journeys.
The rationale behind this increase, as presented by Shadow Chancellor Rachel Reeves, is that APD has not kept pace with inflation. However, critics argue that by the time the increase takes effect in 2026, inflation will have risen by an estimated 111% since APD’s inception, while the tax itself will have escalated by 200% for short-haul flights and a staggering 920% for long-haul flights. This disparity fuels accusations that the tax hike disproportionately targets working families who rely on affordable air travel for holidays. Furthermore, the TaxPayers’ Alliance emphasizes that while the Prime Minister’s travel expenses are covered by taxpayers, ordinary citizens struggle to afford even annual vacations, calling for a freeze on the tax to align it with inflation.
The proposed increase in APD comes at a time when the travel industry is already bracing for job cuts following the National Insurance increase announced in the recent budget. Critics argue that this additional financial burden will further strain the industry and exacerbate its challenges. Tory transport spokesman Gareth Bacon accuses Labour leader Keir Starmer of prioritizing union pay rises over the interests of various groups, including holiday-goers. He suggests that Starmer is willing to impose higher taxes on these groups to fund inflationary pay increases for union members. This raises concerns about the potential impact on the affordability of holidays and the overall burden on families and individuals.
Former British Airways boss Willie Walsh expands on the criticism, stating that APD not only burdens holidaymakers but also negatively impacts the entire UK economy. He points to the aviation sector’s significant contributions, supporting 1.6 million jobs and generating £127 billion in GDP. Walsh questions the logic of hindering an industry that plays a vital role in the UK’s international trade and economic growth, especially when Starmer himself has emphasized the importance of economic growth. This raises the question of whether the potential revenue gains from increased APD outweigh the potential negative consequences for the aviation sector and the broader economy.
The Treasury defends the APD increase, emphasizing that unlike other sectors, airline tickets are exempt from VAT and jet fuel is untaxed. They assert that it’s only fair for the aviation sector to contribute to addressing the £22 billion deficit and restoring economic stability. The Treasury also highlights that changes to APD rates have lagged behind inflation in recent years, and the proposed changes will add a minimal £2 to the cost of a family of four flying economy to Spain, with children under 16 exempt. This justification emphasizes the government’s need to increase revenue and suggests that the impact on families will be minimal, at least for shorter trips.
The debate over increasing APD underscores the complex trade-offs between generating government revenue, supporting economic growth, and ensuring affordability for consumers. While the Treasury argues that the aviation industry should contribute its share to addressing the national deficit and that the impact on families will be limited, critics contend that the increase is excessive, disproportionately affects working families, and undermines the vital role of the aviation sector in the UK economy. The differing perspectives highlight the challenges in balancing competing priorities and the potential consequences of tax policies for various stakeholders.
