Online jet charter broker PrivateFly estimates that approximately half of the estimated £9.3 million in potential revenue from the recent extension of the UK’s air passenger duty (APD) tax to business jets will be lost to nonpayment in the first year. The extended tax, which became effective on April 1, applies to all flights departing from the UK.
Using flight activity data from WingX, PrivateFly said half of the potential APD tax revenue from the business aviation sector would be payable by operators flying non-domiciled aircraft upon departure from the UK. PrivateFly forecasts that most of these overseas operators will simply not pay the tax, resulting in the projected £4.6 million loss.
To collect APD, Her Majesty’s Revenue and Customs (HMRC) is “applying the same logic for airlines to the highly fragmented private jet sector,” said PrivateFly CEO Adam Twidell. “However, it is very different from that of the airlines. More than 3,000 private jet companies flew into the UK in 2012. Routes are not scheduled and the aircraft behave like taxis.”
It is solely up to aircraft operators to register and pay APD, he said, and the system is bureaucratic and difficult to understand. “The result will be many aircraft operators ignoring the tax,” Twidell said. “And with private aircraft able to use more than 300 airports in the UK, the task of tracking down non-payers will be almost impossible.”