It is rather uncommon for customers to be happy about an increase in fares. But if the expected new government coalition in the United Kingdom can actually deliver on their platform it stands that the airfares departing UK airport are quite likely to go up, and it might actually be a good thing for many customers. Indeed, it is possible that raising the airfares will result in lower total costs for many passengers.
Following the most recent round of elections there has been a bit of a scramble to establish a coalition government. One set of negotiations – between the Conservatives and the Liberal Democrats – resulted in the publication of their positions on a number of issues. Buried in point number 11, the section discussing environmental policy, is this bit:
The parties agree to implement a full programme of measures to fulfil our joint ambitions for a low carbon and eco-friendly economy, including: …
The replacement of the Air Passenger Duty with a per flight duty.
So how can one tax replacing another make any sense as a good thing for the passengers? In this case it actually does. The APD is assessed on a per-passenger basis currently. The rates are exorbitant for long-haul flights and doubly so for passengers traveling in the premium cabins. Moreover, the APD, as a tax, is charged individually to all customers even on reward bookings. As such a ticket between the UK and the USA can incur more than $200 in taxes alone.By removing the APD as a line-item that the individual passengers must pay it can be expected that the tax burden as an assignable, per-passenger cost will decrease significantly.
The airlines will still have a cost to bear on the per-flight taxes. And to meet this cost it is almost certain that the fares will increase. But that increase won’t be reflected on reward seats. And the airlines will actually be able to legitimately compete on fare pricing, choosing how to price their tickets and still meet their responsibility to the Crown rather than having such a large portion of the fare dictated to them.
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Are you sure they are not just going to allocate a chunk of the cost as a “surcharge” to each passenger, along the lines of the fuel surcharge?
Could they just up the YQ? Sure. But US carriers do not charge the YQ on reward seats so at least those passengers would benefit.
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