Boris Johnson paves way to cuts in air passenger duty on domestic flights

Boris Johnson is set to approve cuts to air passenger duty on domestic flights in a bid to revive the ailing aviation industry in the wake of the coronavirus crisis.

One option floated today would be to charge the £13 levy on only one leg of a return flight between UK destinations, effectively halving the level of the tax, which raises £3.7bn annually.

Mr Johnson’s green light for a consultation on the move was warmly welcomed by the industry, with Airlines UK hailing it as a boost to carriers facing an “existential threat” to their future after a year of restrictions to travel.

It came in response to the interim report, published today, of Sir Peter Hendy’s Union Connectivity Review into improving transport links between the four nations of the UK.

Mr Johnson also announced £20m to explore potential investments including:

- Better rail links between the north coast of Wales and England.

- Upgrade for the A75 road linking Scotland’s Cairnryan ferry port to Northern Ireland with the motorway system.

- “Significantly” faster rail links between England and Scotland, including the West Coast main line.

- Rail improvements in southeast Wales.

Sir Peter’s report confirmed the appointment of engineering experts Doug Oakervee and Gordon Masterson to look into the “feasibility, cost and timescales” for Mr Johnson’s pet project of a bridge or tunnel to link mainland Britain to Northern Ireland.

But the report devoted only a few lines to the project, which is regarded by many experts as an undeliverable pipedream, and Sir Peter made a point of stating that he had been asked specifically to consider the fixed-link proposal and that work on it would be conducted separately to the rest of his inquiry.

Sir Peter’s report proposed a UK Strategic Transport Network to help connect all parts of the UK by road, rail, sea and air. A final report in the summer is expected to identify specific upgrades which could form the backbone of the network ahead of the allocation of funds in the government’s spending review, expected this autumn.

As well as the option of a “return leg exemption” for APD, the consultation will look at the possibility of a new lower rate for domestic flights.

Reduction or abolition of APD on domestic flights has long been a demand of the UK aviation industry, particularly airlines and airports serving Northern Ireland.

When air passenger duty was first introduced by Conservative chancellor Ken Clarke in 1995, the £5 flat rate for short-haul flights was charged on only one leg of return domestic trips. But under European Union rules the UK was later obliged to apply it to both flights.

Airlines UK CEO Tim Alderslade welcomed the news that the consultation, first promised in last year’s Budget, will go ahead in the spring.

“This is really positive news that will help support regional connectivity, level up the UK, and provide a welcome measure of relief to domestic carriers facing an existential threat from the impacts of Covid,” said Mr Alderslade. 

“It will help to sustain current domestic connections - including into Heathrow, our national hub, as well as all the regions of the UK - which is essential to achieving economic growth and supporting the government’s Global Britain agenda. 

“We look forward to working further with the Hendy Review and ministers and would urge as much speed as possible in the consultation process.”

Mr Johnson said that the connectivity review would deliver the tools to provide a UK-wide transport network.

“We will harness the incredible power of infrastructure to level-up parts of our country that have too long been left off the transport map,” he promised.

“And I also want to cut passenger duty on domestic flights so we can support connectivity across the country.”

Sir Peter said he had  spoken with over 100 organisations and received nearly 150 submissions to his inquiry, identifying shortcomings in the UK’s transport links.

“Devolution has been good for transport but it has also led to a lack of attention to connectivity between the four nations, due to competing priorities and complex funding,” he said. 

“A UK Strategic Transport Network could resolve this.”

The Department for Transport also announced a contest for innovative ideas for zero-emission vehicles, with a potential share of £20m funding up for grabs for successful applicants.

The competition came as the DFT confirmed the government’s target of all new cars and vans being zero-emission by 2035.