First Choice attacks rise in air passenger duty

First Choice Holidays, the tour operator, yesterday lashed out at the Treasury's announcement this week that Air Passenger Duty would double.

The company said the hike would generate an additional £21m for the Government from the 2.5 million passengers that use its mainstream package holiday business every year, three times the annual cost of offsetting their carbon emissions.

The Chancellor announced, in his pre-Budget report, that Air Passenger Duty for economy short-haul flights would jump from £5 per trip to £10, and for long-haul from £20 to £40 for economy class and from £40 to £80 for classes above economy.

First Choice offers an optional service that provides extra leg room for long haul, which would be hit by the new £80 duty.

Mr Long, chief executive of First Choice, said that this amounted to "unfairly taxing tall people" and he will be making a complaint to the Treasury.

Mr Long added: "This duty doesn't seem to have anything to do with addressing the problem of carbon emissions. We believe it is another stealth tax. We recently announced a carbon off-setting programme through which we proposed to offset emissions on a pound-for-pound basis with our customers. This programme is now in jeopardy."

First Choice reported annual results - which were hit by poor bookings over the summer in the mainstream package business - for the 12 months to the end of October.

Profits were down 7 per cent in this division as a result of "bird-flu scares in the early booking period, the World Cup in June and unusually warm weather in July", the company said. First Choice has admitted it is in talks to sell this business.

The company's specialist travel businesses, which offer more exotic destinations and "lifestyle" holidays, saw profits rise. Group pre-tax profits edged up 2 per cent to £117.2m.

The company provided upbeat news on current bookings, propelling the shares up 5 per cent to 278p.

For this winter, mainstream holiday revenues are up 15 per cent, against a market that is down 9 per cent, and for summer 2007 bookings are down 5 per cent, versus a market that is 11 per cent lower.