Plane passengers hit by air passenger duty hike

Plane passengers were hit with a double whammy today when Chancellor George Osborne ruled out scrapping planned air tax rises.

Travellers will now face, from April 1, a big increase in the air passenger duty (APD) airport departure tax.

Not only will this year's rise be in line with inflation but will also take into account the APD increase deferred from April 2011.

It will mean a near-10% hike in APD, adding around £250 to the cost for a family of four flying to Florida and about £360 more to the cost for a four-person family jetting off to Australia.

Following Prime Minister David Cameron's comments earlier this week, Mr Osborne also announced a U-turn on the Government's aviation policy.

The coalition Government had ruled out expanding south-east England airports when it came to power in 2010.

But today Mr Osborne said that the country had to "confront the lack of capacity in the south east of England".

He went on: "We cannot cut ourselves off from the fastest growing cities in the world."

London Mayor Boris Johnson favours a new Thames Estuary airport. The Government, in the form of a statement last January and in Mr Cameron's infrastructure speech this week, has said that such an estuary scheme would be among those considered.

Mr Osborne said today that Transport Secretary Justine Greening would be setting out Government thinking on aviation "later this summer" - a timescale that suggests that any proposals will come long after the result is known of the May London Mayoral election in which Mr Johnson is seeking a further term.

Mr Osborne also announced rail improvement plans for the north of England, including increasing capacity on the Hope Valley line between Manchester and Sheffield.

The Chancellor also said the Government would work with Mr Johnson, and others, on rail improvement proposals including longer commuter trains and increased capacity at stations.

Travel organisation Abta said the APD news was "incredibly disappointing" but added that the South East airport announcement was "encouraging".

The Airport Operators Association said it was "dismayed" at the APD decision, while airline chiefs described APD as a "job-destroying tax".

Tui, holiday company Thomson's parent company, said the APD news showed "how little regard" the Government had for tourism, while Greenpeace said that by announcing possible South East airport expansion plans, Mr Osborne had put up "two fingers to the huge numbers condemned to the blight of more noise and local air pollution".

The £130 million northern rail improvements announced today are part of Network Rail's (NR) Northern Hub scheme.

Today's announcement will increase capacity on the Sheffield-Manchester line and increase line speeds on this line and the Manchester-Bradford via Rochdale and Halifax and Manchester-Preston via Bolton lines.

NR chief executive Sir David Higgins said the announcement was "a welcome show of confidence in rail bringing benefits to passengers as well as driving economic growth".

Air passengers will also face an RPI inflation rate rise in APD in April 2013.

Mr Osborne also announced £56 million of support for the Bexhill to Hastings link road in East Sussex - funding described by the Campaign for Better Transport as "a disastrous use of public money".

Further to Mr Cameron's infrastructure "roads privatisation" speech earlier in the week, the Chancellor said the Government would be exploring new ownership and financing models for the national roads network to drive up efficiency and leverage in private investment.

Mr Osborne also promised to work with the Welsh Government to consider electrification of the Cardiff Valley rail lines.

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