Flybe rescue: What is air passenger duty and why is it criticised?

The Government is to review air passenger duty on domestic routes Credit: Steve Parsons/PA

The Government has announced it will review air passenger duty (APD) on domestic routes among other measures in an effort to help struggling airline Flybe.

But what is APD and why has the proposal been criticised by environmental groups?

  • What is air passenger duty?

A tax introduced to pay for the environmental costs of aviation, APD is levied on passengers aged 16 and over who are departing from UK airports.

Flights departing from Northern Ireland or the Scottish Highlands are excluded, and it does not apply when flying back into the UK.

Flights are categorised into two different bands, based on the distance of the destination from the UK – one band for short-haul, and another for long-haul – and are charged at three rates.

The three rates of duty in each band depend on the class of travel, which means they have different standards of comfort, service, privacy or amenities.

The first is the reduced rate, which is effectively economy, while the standard rate is those in premium economy and first-class seats.

The higher rate is travel in planes of 20 tonnes or more equipped to carry fewer than 19 passengers.

The government is reviewing APD on domestic Flybe routes. Credit: PA

  • How much is it?

APD adds £26 to the price of most return domestic flights – when departure and arrival takes place in the same country – such as those operated by Flybe.

When it was introduced in 1994, it started out as £5 for flights within the UK and to other countries in the European Economic Area (EEA), and £10 for flights elsewhere.

Rates have been raised by successive governments, and the duty is currently charged at £13 for a short-haul flight in economy and £78 for its long-haul counterpart.

  • Why would cutting APD help Flybe?

The airline has criticised the duty, claiming it disproportionately affects its customers, and cutting it would help the loss-making carrier financially.

Transport Secretary Grant Shapps said APD works “slightly oddly”, because “it costs twice as much to fly within the country as it does to fly to, for example, France and back”.

Transport Secretary Grant Shapps said APD works 'slightly oddly.' Credit: PA

  • What do environmental groups say?

As the tax is billed as offsetting the environmental impact of air travel, environmental campaigners have criticised the Government’s decision.

Friends of the Earth aviation campaigner Jenny Bates said Chancellor Sajid Javid must make “the aviation industry play its part”.

“Any review of air passenger duty that leads to cheaper air travel and more polluting flights would be a complete scandal – and rip apart Boris Johnson’s pledge to show leadership on the climate crisis,” she said in a statement.

The Treasury said the APD review ahead of the March Budget would consider the UK’s climate commitments to meet net-zero greenhouse gas emissions by 2050.

  • How has the wider industry reacted?

The owner of British Airways and Aer Lingus has filed a complaint with the European Commission over the government bailing out Flybe.

International Airlines Group (IAG) is angry because the firm was rescued in part by a deferral of an estimated £100m APD tax bill.

Willie Walsh, the CEO of IAG, has branded the bailout a "blatant misuse of public funds".

Mr Walsh has asked why it is up to taxpayers, rather than its rich owners, to bail out the company and claims it breaches state aid rules.