The UK government will introduce a lower rate of Air Passenger Duty (APD) for domestic flights from April 2023 in a bid to boost connectivity within the nation, but long-haul taxes are due to increase.

Chancellor Rishi Sunak made the announcement as he laid out his autumn budget plan. It includes a 50 per cent cut in APD for flights between airports in England, Scotland, Wales and Northern Ireland in 2023/24 that will be delivered via a new domestic band. That means passengers will pay ?6.50 for each flight rather than the current ?13.

However, a new rate of ?91 for economy seats will be introduced for ultra-long-haul flights of 5,500 miles or more, which Sunak said will help the UK government achieve its carbon emissions reduction goals because ¡°most emissions come from international rather than domestic aviation¡±.

The current rate of APD for long-haul destinations (more than 2,000 miles) is ?82 in economy for 2021/22. From April 2022 this will increase to ?84.?

Sunak claims less than 5 per cent of passengers will end up paying more APD, but that ¡°those who fly furthest will pay the most¡±.

However, there were no details in the announcement about whether money obtained through APD would be used for sustainability initiatives as the UK strives to achieve net zero carbon emissions by 2050.

The news has come as a disappointment to the business travel industry, which has been pushing for a reduction across all APD bands for years.

Clive Wratten, CEO of the Business Travel Association (BTA), said: ¡°The BTA welcomes the reassessment of domestic APD.

¡°The introduction of a new ultra-long-haul classification will unfairly impact business travellers at a key point in the recovery of our economy. The government said this was a budget bringing in a new wave of optimism and yet business travellers will be heavily taxed to go to crucial destinations such as Singapore, Hong Kong and Australia.

¡°We are calling on the government to ring fence at least 75 per cent of APD for sustainable initiatives to help our sector deliver on its Jet Zero commitments. This must be about building a sustainable future, not just grabbing taxes.¡±

Andrew Crawley, chief commercial officer at American Express Global Business Travel, commented: ¡°APD was supposed to be an environmental tax, yet no money has been ringfenced for sustainable initiatives. The government needs to get serious by investing the proceeds of APD in the infrastructure we need to support the development of sustainable aviation fuel (SAF). Making SAF widely available is the only way to make meaningful progress against our net zero targets. If revenue generated from the new long-haul band is not invested in a sustainable future, it will do nothing except penalise British businesses trying to embrace the government¡¯s own Global Britain initiative.¡±

Dale Keller, chief executive of the Board of Airline Representatives in the UK (BAR UK), added: ¡°It is inconceivable that the chancellor is choosing to suppress his ¡®Global Britain¡¯ aspirations and posture ahead of COP26 behind a highly flawed environmental rationale. The British public won¡¯t be fooled into thinking that the government is investing their APD money to reduce CO2 emissions from air travel. This is another missed opportunity for the UK to lead on overhauling obsolete taxation policies that are undermining the huge investments in technology and infrastructure needed to drive the sustainable recovery of a critical sector of the economy. Airlines have committed globally to 2050 net-zero targets that require governments to develop pragmatic policies and implement tangible interventions ¨C not resort to tinkering with blunt and regressive taxation that fails to meet the expectations of the public or support the sustainability initiatives of the industry.

¡°We welcome the solution to a longstanding anomaly where return domestic flights have been taxed higher than international flights to Europe, but why wait until 2023? This eventual correction should not be regarded as a tax cut but simply the government finally doing what is fair and right. But the notion that the world¡¯s most heavily taxed long-haul travellers should be expected to subsidise a tax correction for domestic travellers underscores how APD remains not fit for purpose in stimulating a sustainable future for aviation.¡±

Joanne Dooey, president of the Scottish Passenger Agents¡¯ Association (SPAA), said: ¡°The increase in long haul APD¡­ won¡¯t help Scotland¡¯s economic recovery. It¡¯s vital that businesses are able to trade globally from their Scottish bases.

¡°According to Transport Scotland, international air connectivity is important to our nation¡¯s economy and that as an organisation it ¡®promotes sustainable economic growth through helping to improve Scotland¡¯s international air connections, providing enhanced access for business travellers and inbound tourists alike¡¯. It also continues ¡®to promote Scotland as a destination that can sustain more direct international air services and better links to international hub airports¡¯.

¡°As a small nation, Scotland needs its connectivity, so this planned increase is disappointing not only for the travel industry but for Scottish businesses.

¡°We hope that the tax raised by this increase will be ring fenced to support developments in sustainable fuels and other measures to move towards net zero.¡±

Lauren Broughton, head of public affairs at UKinbound, said: ¡°While the reduction in domestic APD is a positive step, increasing APD on long-haul flights is a kick in the teeth to the UK¡¯s third largest export industry, which is only just beginning its recovery. Inbound tourism brings new money into regional economies, supports over 500,000 jobs across the country and will significantly aid the country¡¯s economic recovery and Global Britain ambitions, but imposing further taxes on an already struggling industry is counterintuitive.¡±