UK air passenger duty rise to take more money from aviation; condemned by Ryanair
According to Airlines UK chief executive Tim Aldersdale, "we need a revised and joined-up approach to the UK's strategically vital aviation sector".
His comment followed the UK Labour government's first Budget Statement in late Oct-2024.
The most obvious aviation measure in the UK Budget is a hike in Air Passenger Duty (APD), criticised by Ryanair's Michael O'Leary as a "short-sighted tax grab".
Ryanair plans to cut UK capacity by up to 10%, potentially removing 5 million passengers annually from Europe's biggest aviation market.
The UK Budget also included further support for SAF development and GBP975 million of additional research and development funds for aerospace over five years. Aviation bodies welcomed these measures, but they are relatively minor, and the focus was on APD.
Although the increases might have been much greater, UK passenger charges are already high compared with other large European markets. Airlines are concerned that APD is seen as a form of demand management, while taking money away from aviation when it needs to fund net zero.
- From Apr-2026 APD increases of GBP2-GBP12 in economy cabins and “relatively more” in premium.
- Ryanair’s Michael O’Leary calls the increases a “short-sighted tax grab”. Ryanair plans to cut its capacity by up to 10% in UK, which is its third biggest market.
- UK air passenger charges are already high vs competitor nations such as Germany and France, even after planned big increases by the French government.
- Additional UK aerospace R&D funding announced in the Budget is overshadowed by APD rises.
APD increases from Apr-2026 of GBP2-GBP12 in economy cabins…
Compared with current rates, APD from Apr-2026 on economy flights will be higher by GBP1 for domestic routes, by GBP2 for short haul international and by GBP12 for long haul and very long haul.
The resulting charges in economy cabins will be GBP8 for domestic, GBP15 for short haul international, GBP100 for long haul and GBP104 for very long haul trips.
…and 'relatively more' in premium
The level of charges in premium cabins from Apr-2026 has not been precisely stated, but the UK Budget statement said that increases would be "relatively more".
It can be assumed that APD for premium cabins after Apr-2026 will be noticeably higher than the levels already announced by the previous UK government for Apr-2025.
These will take premium charges to GBP14 for domestic trips, GBP28 for short haul international, GBP216 for long haul and GBP224 for very long haul.
UK Air Passenger Duty (GBP)
|
Segment |
Current |
Apr-25 |
Apr-26 |
|||
|---|---|---|---|---|---|---|
|
Economy |
Premium |
Economy |
Premium |
Economy |
Premium |
|
|
Domestic |
7 |
14 |
7 |
14 |
8 |
"relatively more" |
|
Short haul international |
13 |
26 |
13 |
28 |
15 |
|
|
Long haul international |
88 |
194 |
90 |
216 |
100 |
|
|
Very long haul international |
92 |
202 |
94 |
224 |
104 |
|
Ryanair's Michael O'Leary: 'short-sighted tax grab'
Not surprisingly, Ryanair has led the condemnation of the Labour government's further increases from Apr-2026:
"This anti-growth tax hike will damage UK tourism, jobs and economic growth, especially the UK Regions, with Regional Airports being particularly damaged by this tax on ordinary families."
Ryanair Group CEO Michael O'Leary said that UK Finance Minister Rachel Reeves "has no clue how to deliver growth in the UK economy".
He called the APD increase a "short-sighted tax grab", making air travel "much more expensive for ordinary UK families" and making the UK "a less competitive destination".
Ryanair's no. 3 market is the UK, where it is a top 3 operator
The UK is Ryanair Group's third biggest market by seats. According to data from CAPA - Centre for Aviation and OAG, the UK accounts for 18.1% of its international seats in the week of 4-Nov-2024 and accounted for 16.4% in the week of 19-Aug-2024.
Ryanair (including Ryanair UK) is third by seats in the UK, with 17.5% of seats in the week of 4-Nov-2024. It is only just behind easyJet on 17.9%, and not far behind British Airways on 21.0%.
In the week of 19-Aug-2024 it was second in the UK, with 17.7% (easyJet had 19.4% and British Airways 16.9%).
Ryanair has gained share in the UK since the COVID-19 pandemic. The seat share figures above compare with 14.8% in the week of 4-Nov-2019 and 14.7% in the week of 19-Aug-2019.
UK: top 10 airlines by seats, week of 4-Nov-2024
|
Rank |
Airline |
Seats |
Seat share |
|---|---|---|---|
|
1 |
618,177 |
21.0% |
|
|
2 |
527,899 |
17.9% |
|
|
3 |
450,121 |
15.3% |
|
|
4 |
134,356 |
4.6% |
|
|
5 |
68,335 |
2.3% |
|
|
6 |
66,254 |
2.2% |
|
|
7 |
64,774 |
2.2% |
|
|
8 |
63,135 |
2.1% |
|
|
9 |
62,157 |
2.1% |
|
|
10 |
56,728 |
1.9% |
Ryanair to cut UK capacity by up to 10%
As a result of the announced APD increases, Ryanair is to review its UK schedules, and the airline expects to cut capacity to/from Europe's biggest aviation market by up to 10% in 2025.
According to the ultra-LCC, which is also Europe's biggest airline by passenger numbers, this will reduce UK air traffic by up to five million passengers.
For the calendar year 2024 Ryanair Group is scheduled to have 62.6 million seats in the UK - an increase of 18.7% compared with 52.8 million in 2019.
This compares with the group's 87.8 million seats scheduled in Italy, and 74.4 million in Spain in 2024.
A reduction of 10% in its UK capacity would equate to 6.3 million seats, so Ryanair's claim that this would cut traffic by up to five million passengers is in the right ball park.
This is likely to be reallocated to other markets, consistent with Ryanair's long time strategy of placing capacity where it sees the most attractive cost base.
UK air passenger charges are already high vs competitor nations…
The UK's APD increases will add to the cost of flying and have something of a negative impact on demand as a result.
The increases themselves are not huge - and are not as great as some airlines had feared - but they come on top of already relatively high air passenger charges compared to some competitor nations.
…such as Germany…
For example, on a short haul international trip in economy, the UK's GBP15 from Apr-2026 compares with Germany's current charge of EUR15.53, or GBP12.60, per passenger.
For the longest trips in economy, the UK's GBP104 compares with Germany's EUR70.83, or GBP59.50 (assuming the current exchange rate of exchange at 0.84 as at 5-Nov-2024).
…and France…
France levies a number of charges on air passengers.
These are: the 'Civil Aviation' rate (which funds the French Civil Aviation Authority); the 'Solidarity' rate (which contributes to global public health programmes and French public infrastructure); and airport-related levies known as the safety and security rate.
Since the last of these can be seen as similar to an access charge for the use of airports, it is not comparable to the UK's APD, which is a general taxation tool.
In France, an international short haul flight attracts EUR5.05 for the Civil Aviation rate and EUR2.63 for the Solidarity rate, giving a total of EUR7.68, or GBP6.45.
For medium and long haul in economy, the Civil Aviation rate is EUR9.09 and the Solidarity rate is EUR7.51, for a total of EUR16.60, or GBP13.94.
These rates are significantly lower than UK APD.
…even after planned increases by the French government
The French government plans to raise the Solidarity rate substantially from the start of 2025. In anticipation, Air France has already increased the sums it collects from passengers booking flights for next year accordingly.
For economy passengers on domestic and short haul, the sum is rising to EUR9.50. On medium haul, the sum is up to EUR15, and on long haul it is rising to EUR40.
Including the Civil Aviation rate, this takes the total for short haul flights to EUR14.55, or GBP12.22, and for the longest flights to EUR49.09, or GBP41.24.
These rates are still well below the UK APD.
Ryanair has also been critical of France's planned increases in the Solidarity rate. Eddie Wilson, chief executive of Ryanair DAC has said that the tax risks are "further undermining France's air connectivity, as well as tourism, jobs and economic growth".
Airlines UK and BALPA have also criticised UK APD increases
Ryanair was not long in criticising the UK government's decision to increase APD.
Airlines UK chief executive Tim Aldersdale has said that APD "already makes the UK less competitive".
He added that further increases, together with rises in other charges on business, "will impact growth, directly hitting the pockets of ordinary travellers[,] and [are] making it harder for UK airlines to put on new routes."
The British Airline Pilots Association (BALPA) expressed disappointment at the increases.
"Such measures not only hinder the competitiveness of UK aviation in a global market[,] but also fail to contribute to the sustainability goals we aspire to achieve," it said in a statement posted on its website.
BALPA called on the government either to scrap APD or to reinvest the revenue generated from the charge into sustainability practices.
Other parts of the UK Budget were welcomed by aviation representatives
Some other parts of the Budget Statement had a more positive reception among aviation organisations.
BALPA welcomed measures to increase certain employment rights. "Increasing job security will provide stability and increase economic growth," it said.
On the sustainability theme, Airlines UK welcomed the announcement in the Budget to fund the Advanced Fuels Fund for a further 12 months, to support UK SAF production.
AirportsUK also welcomed this decision, and the announcement of GBP975 million of additional research and development funds for aerospace, "which can support the sector's transition to zero emission flight".
Additional UK aerospace R&D funding is overshadowed by APD rises
The UK government says that the increases in APD, including a 50% increase for larger private jets, will yield GBP520 million in 2026-27, rising to GBP720 million in 2029-30.
The total additional sum flowing to the Treasury over four years will be almost GBP2.4 billion.
By comparison, the announced GBP975 million of R&D funding over five years does not seem a very significant sum.
Moreover, details of this spending have not yet been communicated.
Passenger taxes detract from investment in the green transition
High passenger taxes look a lot like an attempt at demand management.
Reducing traffic does lower carbon emissions, but it does not provide a path to net zero.
Perhaps the most frustrating aspect of the UK's air travel tax for aviation is that it siphons funds from the industry at a time when huge investment is needed for the green transition.