Why a new UK tax could mean fewer flights and higher airfares

A new online permit for passengers transiting through British airports could harm Heathrow and lead to a slump in customers for British Airways and Virgin Atlantic.

About one-third of passengers at London Heathrow are in transit; at present, the vast majority need only the paperwork for their final destination.

But the British government says future transit passengers will have to apply online for an Electronic Travel Authorisation (ETA) – paying £10 and getting a decision “usually” within three days.

Industry figures warn that “tens of thousands of people will find an easier hub” and “other European carriers will be laughing as they pick up this business”.

Standard transit practice at London Heathrow is currently in line with the rules prevailing at hub airports such as Amsterdam, Frankfurt and Paris CDG: passengers who are switching from one flight to another, and thus not passing through passport control, do not need advance permission as long as they qualify for admission to their final destination.

A small number of connecting passengers of specific nationalities are required to obtain a £35 Direct Airside Transit Visa to change planes at Heathrow.

But when the ETA scheme takes full effect, all passengers except British and Irish nationals will need a permit – even if they are simply switching from one British Airways plane to another at Heathrow Terminal 5.

ETAs will be mandatory for travellers from Qatar – the chosen trial location – from 15 November. From then, Qatari nationals transiting at Heathrow – for example, from Qatar to the United States – will need to obtain the permit in advance.

Industry experts predict travellers with a choice of routes will switch to other hubs to avoid extra red tape and cost.

Rob Burgess, editor of the frequent flyer website Head for Points, said: “I suspect this will be a nightmare for BA and Virgin Atlantic.

“Why would anyone pay £40 for a family of four to get an ETA purely so they can transit in the UK on the way from, say, the US to Croatia? All of the other European hub carriers will be laughing as they pick up this business.”

Paul Charles, former Virgin Atlantic communications director and director of The PC Agency, said: “The UK has a ridiculous habit of applying policies which will put off some people from travelling through its airports.

“Our core airlines, BA and Virgin Atlantic, rely on transit passengers to fill their long-haul flights, make a profit and employ more people.

“This additional permit is unnecessary at a time when the UK needs to prove it is open for everyone and highly competitive.

“Taxing transit will turn away tens of thousands of people who will find an easier hub.”

A Home Office spokesperson said: “Strengthening our border remains one of the government’s top priorities and the introduction of the Electronic Travel Authorisation (ETA) scheme will enhance our border security by increasing our knowledge about those seeking to come to the UK and preventing the arrival of those who pose a threat, including those transiting through the UK.

“Requiring transit passengers to obtain an ETA will stop transit being a future loophole for people to use to avoid needing an ETA.”

Ministers say the ETA will mirror the Esta required by the United States for connecting passengers transiting at American airports.

But there is a crucial difference: all transit passengers are required to clear Customs & Border Protection and be legally admitted to the US; this does not happen at Heathrow. Furthermore, few US airports rely on international-to-international passengers for business in the way that Heathrow does.

Airlines will be responsible for checking the ETA before allowing travellers to board a Heathrow-bound flight, but UK Border Force will not check passengers on arrival.

Most of Heathrow’s connecting passengers are on British Airways, but Virgin Atlantic also picks up a significant number of transit travellers from its partner airlines, including Air France, KLM and Delta.

In addition, the Star Alliance – based at Heathrow Terminal 2 – facilitates connections between airlines including Air Canada, Air India, Ethiopian Airlines and United.

Besides the potential financial damage to airlines and Heathrow airport, the government decision could also impact British passengers. A number of routes and frequencies are viable only because of the volume of connecting passengers. If services are cut, choice will reduce and fares could rise.

A spokesperson for the airport said: “Heathrow is a strong hub and Europe’s largest airport. Transiting passengers play a key role in supporting routes to many long-haul destinations boosting trade, tourism and investment opportunities. The government should ensure visa and border policies do not generate any competitive disadvantage for the UK.”

ETA becomes mandatory on 15 November only for nationals of Qatar. The programme will be extended on 22 February 2024 to nationals of Bahrain, Jordan, Kuwait, Oman, Saudi Arabia and the UAE.

“More nationalities will be added to the scheme later,” the government says.