Business aircraft flights from the UK will be subject to air passenger duty (APD) beginning in April 2013.
The planned change was announced on November 29, but further details published on December 6 revealed that the British government has made concessions to the bizav community, such as withdrawing plans for flat rates of tax regardless of distance flown and with two bands of charges according to aircraft size. Helicopters and flights involving emergencies, training and research will be exempt.
The APD, which already applies to airline passengers, will apply for flights in business aircraft weighing more than 5.7 metric tons (12,566 pounds). Rates will be assigned by distance flown, according to four bands–A, B, C, D–already used for airlines (see chart).
For aircraft weighing 20 metric tons (44,091 pounds) or less or with 19 or more seats, the APD “reduced” rate would apply for aircraft with seat-pitches equivalent to those of airline economy-class cabins (as might be the case for corporate shuttles) or the “standard” rate for any more spacious configuration. The “standard” rates are twice the “reduced” rate and would likely apply to most business aircraft.
For aircraft weighing 20 metric tons (44,091 pounds) or more or with fewer than 19 seats, passengers will be charged twice the “standard” APD according to the distance band of each flight. So, for any aircraft the size of a Bombardier Challenger 601 and larger, each passenger would pay between £52 ($80) and £368 ($570) depending on the length of a flight.
With a view to reducing administration costs, the UK government intends to introduce a program under which business aircraft operators can choose to estimate the average number of passengers carried and pay APD on that basis. The details of the plan and the exact means for collecting APD will be subject to further consultation with the industry. This is one reason the government agreed to defer the new tax by 12 months, until April 2013.
In a joint statement, the British Business and General Aviation Association, the European Business Aviation Association and the British Helicopter Association expressed some relief over the final form of the tax, commenting that, “this was an excellent consultation process and result provides a sensible and fair solution for our business aviation.”
Privately, business aviation lobbyists have conceded that they felt unable to oppose the extension of APD altogether out of concern that it would provoke a negative reaction from airline passengers who have had to pay the duty for several years and who now face increased rates of duty.