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Summary
- Holiday goers may now have to pay more taxes on long-distance flights.
- The Treasury is considering hiking Air Passenger Duty for journeys to Singapore, Australia, Peru, and New Zealand.
- The UK government had announced a cut in APD for domestic travels to strengthen connections with the European Union.
After the introduction of a non-essential trip fine to curb the spread of the pandemic, holiday goers may now have to pay more taxes on long-distance flights as a step towards achieving net-zero emissions by 2050. The UK Treasury is considering hiking Air Passenger Duty (APD) for trips to Singapore, Australia, Peru, and New Zealand. The government had announced a cut in APD for domestic travels to strengthen connections with the EU. The increase in APD for international flights would help the government to offset the cut.
Also read: Why Are Travel and Leisure Stocks Bleeding?
The UK government would start a consultation that would seek views on whether to increase the number of tax bands on the international routes as part of the process to address its net-zero emissions commitment.
There are two tax bands currently. One tax band is for flights till 2,000 miles and one for trips beyond that. For long-distance flights, passengers pay £80 APD at present, and for domestic travel, £26 is charged for the return journey. The new scheme aims to make it up to three or four.
The government said that an APD would make the polluter pay more as those travelling farthest internationally are making the biggest impact on the environment, and they should be made to pay for the pollution.
A look at some of the largest airline stocks by market capitalisation and how have they reacted to the news:
EasyJet Plc (LON: EZJ)
The shares of the British low-cost airline were trading at GBX 951.4, up by 4.42 per cent, after closing at GBX 910.40, on 23 March at 10:35 GMT+1.
Also read: Travel Industry seeks government’s support for relief
For the quarter ended 31 December 2020, the group revenue fell 88.4 per cent to £165 million from £1,425 million in the same period a year ago. The company said that its performance was in line with expectations and that government restrictions and Covid-19 uncertainties impacted demand.
EasyJet Plc’s daily share price performance
(Source: EODHD/Others, Thomson Reuters)
Wizz Air Holdings Plc (LON:WIZZ)
The shares of the European low-cost airline were trading at GBX 4,864, up by 1.72 per cent, after closing at GBX 4,780, on 23 March at 10:51 GMT+1.
Also read: Wizz Air Holdings (LON:WIZZ) And Sufferings of The Aviation Industry
For the quarter ended 31 December 2020, the company’s revenues fell 76.5 per cent to €149.9 million from €637.3 million in the same period a year ago. Its underlying EBIDTA fell to €40.9 million from €130.8 million.
CEO József Váradi said that the company’s aim was to begin operations as soon as restrictions were lifted and protecting the health of everyone while doing business.
Wizz Air Plc’s daily share price performance.
(Source: EODHD/Others, Thomson Reuters)
Jet2 Plc (LON:JET2)
The British airline company’s shares were trading at GBX 1,315.59 on 23 March at 11:02 GMT+1, up by 4.52 per cent, from the previous close of GBX 1,260,
For the half year ended 30 September 2020 the company’s revenue fell 88 per cent to £299.9 million from £2,528.8 million. The company made a loss of £68.7 million, falling 125 per cent from a profit of £278.6 million in the same period a year ago.
Executive chairman Philip Meeson said that the news of potential vaccine was welcome, but the company continued to remain cautious as it approaches summer 2021, and its current seat capacity was close to 2019 summer levels.
Jet2 Plc’s daily share price performance.
(Source: EODHD/Others, Thomson Reuters)
