Feature: Air Tax rise means travellers need to be smarter

By Chris Jefferies

With the coalition Government today announcing a 55 per cent rise in Air Passenger Duty, Thrifty Holidays is advising cash-conscious travellers on the various ways that they can change their holiday habits to cope with this significant tax rise.

The cost to travellers

The APD increase is a significant blow to families thinking of booking a long-haul holiday. A family of four visiting Australia will now have to pay £340 in tax, which doubles to £680 if they have choose extra leg room in premium economy class.

As a result many British tourists may have to change their travel plans significantly. Mark Tanzer, Chief Executive of the Association of British Travel Agents, said: “Increasing taxes will make taking holidays, and visiting friends and relatives, unaffordable for many.”

Last month, British Airways Chief Executive Willie Walsh echoed this view, saying that the Government’s “obsession with taxes on flying… will inflict considerable harm on airlines and their ability to do good for society”.

A recent survey by holidayextras.com has shown just how unpopular the tax rise is amongst holiday makers. Less than a fifth of those polled supported the increase in flight taxes, an arrivals/departure tax was thought to be a fairer idea by 29 per cent of respondents, but more than half said travellers shouldn't be taxed at all.

Skipping on insurance

The impact of the APD rise is likely to be widespread, including a knock-on effect on travel insurance, with more customers rethinking their holiday plans at the last minute for financial reasons.

Peter Hayman, Director of P J Hayman Travel Insurance Specialists, is encouraging travellers to check their policy to make sure they are properly covered, as many travel insurance policies do not cover APD refunds in the event of a cancellation.

He added that customers should resist the urge to forgo travel insurance as a cost-cutting measure. “Not taking travel insurance is a false economy with claims costs considerable even for short haul destinations such as Spain and Turkey.”

Scott Gorman, Sainsbury's Travel Insurance Manager, is also concerned that families may cut corners to save money:

"Many holidaymakers could find it hard to budget for such a significant increase in tax, and we are concerned that this could also force consumers into compromising their family's safety by forfeiting travel insurance. Travel insurance is a vital element of any holiday but there is a real possibility that, because it isn't mandatory, consumers may dismiss it."

Staying in the UK

However, the most obvious way to protect your budget and avoid being impacted by the APD rise is to forgo flying altogether. It’s no co-incidence that over recent years many British holidaymakers have chosen to take a staycation instead of going abroad, and there are many exciting destinations to explore in the UK, which you can see without breaking the bank.

Nigel Pocklington, VP of Global Marketing & Strategy at Hotels.com, said: “The hike in APD will push travellers to look for better value at home. We expect to see rising domestic demand for areas such as the Cotswolds, the Lake District and Cornwall.”

There are, of course, many ways to venture abroad without flying, thereby avoiding the APD rise completely. Several rail and ferry options are potentially cost-effective, and tend to have a smaller carbon footprint.

Eurostar on the rise

Next year could well see a shift away from low-cost air and towards high-speed rail as Eurostar prepares to expand its network to take in Amsterdam and Geneva.

The high-speed rail service is also due to take delivery of several new trains in 2014, which will reduce journey times due to a maximum speed of over 200mph. As a result, Amsterdam will be reachable from London in just over four hours and Geneva in around five.

The new trains also have an increased capacity (900 compared with 750 on the old trains), and so customers can expect the price of continental train travel to come down eventually as Eurostar pays off the initial investment.

Whilst it will probably take much longer than this for Eurostar to offer the levels of affordability that the likes of Ryanair and EasyJet currently boast, the new fleet of high-speed trains does suggest that this will be the future of cost-efficient travel for many cash-conscious Brits.

If the aviation industry is right in saying that the new APD tax rise will price many out of air travel, it seems that their loss could well be Eurostar’s gain.

 

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