More airlines could follow bmi regional’s lead over APD anomoly

More airlines say they are considering following bmi regional’s lead over the ‘class anomaly’ of Air Passenger Duty.

The Aberdeen-based airline has removed the curtain between its economy and business class cabins on its Embraer aircraft so that all of its passengers pay the lower rate of APD (see earlier story).

Under APD rules, airlines which operate more than one class – whether it’s economy and business or economy and premium economy – have to charge double the APD to passengers in the higher class.

However, passengers on airlines operating with a single class – even the likes of business-class airlines Silverjet, Eos and MAXjet – only have to pay the lower rate.

First Choice and Thomas Cook both confirmed that they were now considering ways to lower the APD charge for passengers who have upgraded to their ‘premium’ economy classes.

“We haven’t got any immediate plans to remove the curtains but it’s all so new and we’re really interested to see what happens,” said a spokeswoman for First Choice.

A Thomas Cook spokeswoman said: “Thomas Cook is committed to ensuring that its customers get the best possible deal. The company is currently examining ways to minimise the impact of APD on customers, including on its aircraft.”

Roger Wiltshire, secretary general of the British Air Transport Association, said since APD was introduced 10 years ago the face of the airline industry has changed.

“Commercial initiatives in the marketplace means that an extra class of travel has been introduced by many airlines. Now that APD has doubled, an £80 charge for a long-haul flight is not really appropriate for these ‘premium economy’ products.

“We think the banding of it is now out of date and we are very keen to see that rationalised.”

He said this anomaly was part of the discussions currently taking place with the Treasury.

A spokesman for the Treasury said airlines who simply removed their curtain dividers risked investigation by Revenues and Customs which oversees the collection of APD.

“If the aircraft is separated into different areas and has different seats, in a different configuration, and are marketed differently, this counts as a different class.”

He said APD was charged at two different rates because “that made it easiest to work with airlines’ existing systems”.

“It’s also for two reason,” he said. “Firstly because the seats are more expensive and someone paying £5 on a £3000 seat is an insubstantial amount of money, so they need to pay a higher level.

“Secondly, there should be a higher price for business travel to give a greater environmental signal.”

But when reminded of the fact that business passengers on all-business class airlines pay the lower rate, while holiday makers on charter airlines who pay slightly more for more leg room pay the higher rate, he said: “We’re aware of the concern about this anomaly and discussions are taking place with the industry. All I can say is that we keep all taxes under review.”

By Bev Fearis