The finance of flying – UK Spring Budget 2024
Professor Adrian Palmer has a look at who’s actually paying to fly Business Class at the front of the plane, examining the impact of the Chancellor’s budget will have on air travel.
Hidden in the Chancellor’s budget statement was a rise in Air Passenger Duty for travellers flying in Business Class, First Class or “Premium Economy”. For flights over 5,500 miles, the total tax will now add £224 to the ticket price, rising by about £24. What does this say about the state of the travel market and future trends?
First, the term “Business travel” is becoming increasingly ambiguous in definition and measurement. It can refer to supply-side and demand-side factors. On the supply side, it is relatively easy to record how many people are travelling in Business class, plus its upgraded First-class format and its relatively no-frills Premium Economy format – airlines routinely report this information. But the demand side is more difficult to understand, and the term business travel may be a misnomer for who is actually travelling in these cabins.