The ever-increasing cost of premium awards from Britain

The latest British budget proposal is out and for travelers there’s one very important number to look at. The Air Passenger Duty (APD) is charged to every traveler originating in the UK and it is not a small number. Fortunately the latest proposal doesn’t have it increasing for most travelers, but for a small handful it jumps significantly.

Passengers flying long-haul currently pay £150 (~$200) to depart the UK in premium cabins. That rate increases to £156 (~$210) in April 2018. In April 2019 the proposed budget has it jumping to £172 (~$230). That’s a pretty significant increase. Neither the short-haul APD nor the long-haul economy class APD are slated to increase under the new budget scheme. That’s a win for most passengers as those two categories cover the vast majority of travelers.

While the increase affects all tickets for premium cabin long-haul travel departing the UK those booking award tickets are disproportionally affected. Competition helps temper fares overall in the market meaning that airlines at least share the burden of the increasing APD with their consumers. Also, the APD premium is combined with the other cash outlay in the purchase so it is a lower total percentage of consumer spend. For award tickets, however, the bulk of the “fare” is generally paid through points, not cash. That makes any hike in the APD more pronounced for reward travelers, especially when redeeming points from a program that doesn’t also levy a fuel surcharge fee on awards.

And those already high costs continue to increase.

On the plus side, as noted above, the vast majority of travelers will not see an impact from the revised APD. Some back-of-napkin math suggests that less than 10% of passengers who depart from a UK airport are paying the premium APD due to either flying in economy class or on a connecting itinerary. And for those passengers the freeze on APD in 2019 is good news, though not as good as the oft-debated cutting of the tax would be.