Virgin Atlantic will not pass new UK tax onto passengers

Virgin Atlantic has made the decision not to pass on what it calls an “unfair retrospective” increase to passengers in the form of Britain’s Air Passenger Duty, according to a letter by CEO Steve Ridgway.

The airline will instead pay the surplus on its own. In a letter by Virgin Atlantic CEO Steve Ridgway to UK Chancellor George Osborne, Ridgway said he was concerned about impact of the APD on passengers and business.

“We have been placed in the invidious position of either being forced to go back and ask those passengers for more passenger interests or absorb the costs ourselves,” he wrote. “We pride ourselves on defending and championing passenger interests, so we have taken the costly decision to shield our affected passengers from a tax surcharge.”

The move could mean hundreds of thousands of pounds on Virgin’s bottom line.

“I do not underestimate the challenge you face in reducing the deficit, but given the importance you rightly place on international trade and inbound tourism in driving growth, increasing the cost of doing international business and visiting the UK is the last thing that should happen at this time,” Ridgway wrote. “APD is not just a tax on air passengers; it is a tax on tourism and trade.”

As of April 1, the APD means British travelers to the Caribbean will pay approximately $257 extra per ticket, up from $238. The issue was a major point of discussion at the UK-Caribbean Forum in Grenada in January.

The Caribbean Tourism Organization has called the tax discriminatory because they charge that many Caribbean countries, which are the same distance to London as many US states, are charged higher duties because they are in a different “band.”

According CTO statistics, the region saw a decline in British travelers for the third year in a row.