Last month, the chief executive of Jet2.com and Jet2holidays, Steve Heapy, during the ABTA concention in Magalluf, warned the UK government not to treat the travel sector as a ‘cash cow’ ahead of the Autumn Budget, expressing deep concerns about new tax burdens. Speaking at the convention in Calvia Heapy expressed fears that more workers will be pushed into a higher tax bracket with the November announcements and he warned that will no be good for the travel industry, neither at home in the UK nor abroad.
And since then he told the Bulletin at the World Travel Market that travel faces a tough year ahead after holding talks with Mallorca hoteliers in London at the World Travel Market. Heapy said that higher taxes which are set to be announced by Chancellor Rachel Reeves in her budget would have a negative impact on holidays bookings to Mallorca next year.
He also said that higher costs in the Balearics, from landing fees at Palma airport to prices in the resorts, could also dent bookings. Heapy said that he would like to see a joint marketing and promotional plan for the islands to head off competition from destinations in North Africa who were “spending lots of money.”
And now, much to the fury of all the UK airlines and Ryanair, there are serious fears that Chancellor Rachel Reeves is likely to increase a range of taxes as part of the autumn Budget, with air passenger duty (APD) expected to rise. Chancellors see APD as an attractive tax. Airlines do the collecting on HMRC’s behalf. Many of the people who pay it – overseas visitors – do not vote in the UK, according to Simon Calder.
Under Reeves’ plans, Air Passenger Duty – a stealth levy on air fares also known as the ‘holiday tax’ – is set to rocket by several times the rate of inflation and that will mean a further increase in the price of flights and holidays to popular destinations line Mallorca and beyond. Ryanair believes the APD is a burden that increases the price of flights, disproportionately affecting budget airlines and their passengers.
The airline’s CEO, Michael O’Leary, has stated that abolishing or cutting APD would allow Ryanair to offer more services and expand its presence in the UK, particularly in regional airports. Ryanair warns that higher APD rates make the UK a less attractive and less competitive destination for tourism and investment compared to other countries that have lower or no aviation taxes.
The airline has threatened to cut further flights from the UK and reallocate capacity to countries with lower taxes, citing examples like Ireland, Hungary, and Italy as places where they have expanded due to the absence of such taxes. Air Passenger Duty (APD) rates increased on April 1, 2025, primarily affecting non-economy and long-haul flights, with different rates depending on the flight’s distance and class of travel. For example, the standard rate for Band A (0-2,000 miles) flights increased from £13 to £28 for standard economy tickets. Another rate increase is scheduled for April 1, 2026.
APD rates from April 1, 2025
Flight Type Mileage Band Standard Rate
Domestic N/A £7
Economy A (0-2,000 miles) £13
Premium A (0-2,000 miles) £28
Economy B (2,001-5,500 miles) £90
Premium B (2,001-5,500 miles) £216
Economy C (over 5,500 miles) £94
Premium C (over 5,500 miles) £224
Key points
Premium and long-haul flights: The largest increases in APD were for premium cabin and ultra-long-haul flights.
Economy flights: Rates for domestic and standard economy flights were kept unchanged or had minimal increases in 2025, with a rise in the domestic rate from £13 to £14 for a standard rate and a slight increase in the economy rate for short-haul flights from £13 to £15 in April 2026.
Private jets: Rates for private jets also saw an increase, with an extra £6 in April 2025, bringing the rate to £84. Next increase: Further rate increases will take effect on April 1, 2026 and they could be sharper than expected.