Guide to avoiding the UK Air Passenger Duty

Discussion in 'Delta Air Lines | SkyMiles' started by mtkeller, Aug 12, 2011.  |  Print Topic

  1. mtkeller
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    mtkeller Silver Member

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    Anyone who's booked an award ticket to the UK in a premium cabin has undoubtedly gotten the bill and thought "Why on earth am I paying so much in taxes?" It's the atrocity known as the UK Air Passenger Duty, and I thought I'd point out how using DL's open jaw and stopover rules on award tickets can help you reduce your overall tax bill.

    What is Air Passenger Duty (APD)?

    It's an anti-tourist tax levied by Her Majesty's Revenue and Customs on all flights departing the UK, provided that the passenger is not simply making a connection in the UK. You also will not pay the APD if you fly ATL/MSP/DTW/JFK/BOS/MIA-LHR and then use another means of transportation (car, train, ferry) to leave the UK. The UK does not collect any taxes or fees for flights landing in the UK, not even charges for immigration and customs!

    Important note: APD is not charged if you're just connecting in the UK. Thus, JFK-LHR-FCO will only be subject to about $26.70 in passenger service charges at LHR, not the full APD for LHR-FCO. Similarly, if you fly LIN-LHR-JFK, you'll just pay the passenger service charge, not the APD. Remember that a connection means you're in the UK for less than 24 hours. Anything more than that, and the APD kicks in. If you can actually find low tier business award inventory from the US to LHR, you'd get one of DL's best BusinessElite hard products for your overnight flight and then connect straight on to your final EU destination without paying hefty UK APD. However, that means you have less than 24 hours in London, which isn't all that great, since there's so much to see and do here.

    How is it determined?


    For the full details, see this document. However, the short version is that there are two determining factors: cabin flown and distance to next stopover (not connection) location. Rates for premium cabins are pretty high, and rates for coach are half the rate for the premium cabin. (Premium economy is generally treated as a premium cabin. However, DL and KL don't provide a true premium economy fare bucket and cabin, so flights booked in coach with DL and KL are charged APD at the coach rate, even if you're in an EC seat.) Since most of our posters are US or EU based, I'm going to restrict myself to that context when discussing distance. For some bizarre reason (that works out well for Americans), HMRC decided that instead of basing the distance criterion on distance from London to final destination city, the distance used would be the distance from London to the capital city of the country where the next stopover occurs. Thus, even though London and San Francisco are 5367 miles apart, the APD is based on the distance from London to Washington, DC, which clocks in under 4000 miles. The price bands (rates for premium cabin APD) are 0–2000 miles (£24), 2001–4000 miles (£120), 4001–6000 miles (£150), and over 6000 miles (£170). If you fly from London to an EU country and stay there for over 24 hours, you'll only pay £24 in APD (£12 if you're willing to take those segments in coach, which is basically the same as business except there might be someone in the middle seat). However, if you fly from London back to the US or fly from London to Paris/Amsterdam/Rome/Milan and stay there for under 24 hours before continuing on to the US, you'll be charged £120 in APD.

    How can I avoid paying the APD?

    For revenue tickets, it's generally not worth trying to duck, since the cost to get somewhere else can be hefty. However, for award tickets, it's pretty easy given DL's open jaw and stopover provisions on award tickets.

    1. Fly into the UK, but depart via another means. (You could book a cheap ticket with an LCC to somewhere else and return from there, but I'm going to ignore that, since the LCC fares vary and there would be too many potential return points to consider for taxes.) This will create an open jaw in your ticket, which is perfectly legal. What's that? You're an American and don't really like the idea of driving on the left side of the road to leave the UK? No worries!
      • A one-way ticket from London to Paris on Eurostar, booked in advance, starts at £39 (~$63.46). (You'll then pay ~$122.20 in French taxes to fly out of CDG back to the US in a premium cabin.)
      • Taking a train and overnight ferry from London to Amsterdam starts at £68 (~$110.65). (The per person rate goes down a bit if you have more than one person travelling, since you can book a multi-person berth. From AMS, you'll pay ~$41.90 in Dutch taxes to fly to the US.)
      • Taking a train and ferry from London to Dublin starts at £32 (~$52.07). (From DUB, you'll pay ~$29.10 in Irish taxes to fly to the US.)
      • Flying straight back to the US, at current exchange rates, would incur $195.90 in APD and $35.60 in passenger service charges for LHR, for a total of $231.50. Every single one of these train/ferry options saves you money over paying the UK APD!
    2. Treat London as a stopover on your way to the continent or Ireland before returning to the US. This doesn't totally allow you to avoid the APD, however you move down to the 0–2000 mile APD band, provided you're in the other country for more than 24 hours. Just to pick a few SkyTeam non-stop destinations from LON, if you fly from London to any of the following destinations, the total cost of taxes you'll incur to get back to the US (UK APD and passenger service charge plus stopover country taxes/fees) is as follows:
      • CDG=$197.70 (comparable with Eurostar)
      • AMS=$117.40 (cheaper than train+ferry for a single passenger, but not the experience of train+ferry)
      • FCO=$102.60 (I expect Milan is similar, but I didn't check. This was priced using an AZ flight. Connecting in AMS or CDG will drive things up.)
      • DUB=$98.80 (flying LCY-DUB using AF's CityJet service...a shade more than train+ferry)
      • A Paris stopover doesn't save you much, but you get to visit Paris and London on the same trip! A stopover in AMS, FCO, or DUB saves a good chunk of change, especially with multiple passengers, and you get to visit a second European city without paying any more in miles. (You can check out other AF destinations served from LCY here, as some of them are viable places to return from with DL, perhaps plus a short train ride, avoiding connections and taxes in AMS, CDG, and FCO.)
    Hopefully this gives you an idea of how to leverage the open jaw and stopover rules for DL award tickets to reduce the taxes and fees paid and enhance your vacation. I pulled the tax/fee rates from ITA using business class revenue tickets, since these taxes and fees will work out the same (up to currency conversion rates) for revenue and award tickets. If someone's experiencing something different, please let me know. Also, please post questions!
     
  2. tom911
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    tom911 Gold Member

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    I did the London-Dublin train/ferry trip again this year with friends and thoroughly enjoyed it. Food is a little pricey on the ferry, but that's really the only downside, and if we weren't traveling on a Sunday we could have gabbed a pie at the bakery in Holyhead instead. I booked on-line and printed my ticket at Euston station at a Virgin kiosk.

    We flew into London and home from Dublin. Additional savings for us, using AA systemwide upgrades to business class, was avoiding the additional luxury tax for upgrades that is collected for UK departures.

    Last year I came home from Frankfurt and Dublin to avoid the UK departure tax and additional business class tax for using my upgrades. Still a substantial savings even with a separate paid flight to get to those.

    [​IMG]
     
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  3. mtkeller
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    mtkeller Silver Member

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    Glad to hear you enjoyed it. I've lived in the UK for almost a year, and haven't yet made it to Ireland. I'm thinking the train/ferry combo will have to be part of getting me there and back when I do decide to check out the neighboring island.
     
  4. Mike1625
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    Mike1625 Silver Member

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    Am I correct to assume that traveling to London in J and back to the US in Y would not incur this cost? I know that most would prefer J or F both ways, but for those of us watching our $$, this could be a viable solution. (assuming that your airline of choice allows a booking like this for less miles than a J RT.
     
  5. tom911
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    tom911 Gold Member

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    Many of the taxes are the same whether you depart the UK in coach or business. For instance, both types of passengers will pay the $50.70 UK passenger service charge. However, UK air passenger duty for departing passengers is $97.90 (60 pounds) in coach and jumps to $195.90 (120 pounds) in business. I used a sample one way DL itinerary LHR-JFK in September for these using ITA software. I was pricing an AA itinerary to/from London today and total taxes were $219 in coach and $317 in business. Makes it a lot easier to consider higher fares to other countries where taxes are less (i.e. Spain, where they run less than $100RT in coach).
     
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  6. mtkeller
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    mtkeller Silver Member

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    tom911 is correct, the APD for departures in Y is half that of departures in (true) premium economy/business/first. If you need/prefer to fly out of the UK, it's a good way to save £60 (around $100) and 20K miles in the process.

    In fact, I used this trick to save a smaller amount (~$20) on a change I just made to an award ticket. Wanted to try KE's flat beds (and hopefully A380), so I switched the origin of my Australia trip to FRA. Of course, this requires routing back to FRA (already have my open jaw Down Under), so I took a four month stopover in LON and then routed on KL (lowest taxes and YQ of the ST European carriers) back to FRA in April in coach.
     
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  7. Mike1625
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    Mike1625 Silver Member

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    Ok, another question ..... what if I get a free upgrade to premium economy... as a Plat on Delta might get? Or an op up to J at the gate? Not complaining about paying the tax if I got an op up, but I am just curious what happens in those situations? And thanks for taking the time to answer my last question. I have 1 or 2 trips coming up, and not much experience.
     
  8. mtkeller
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    mtkeller Silver Member

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    I've never heard of someone having extra tax collected on an op-up. I would guess since you only paid (with cash or miles) for the lower class of service, that's all HMRC would expect to tax on. (Upgrades with miles or SWU, however, likely do result in the tax being collected.)
     
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  9. Mike1625
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    Mike1625 Silver Member

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    Thank you ... now one last question. I think DL plats can chose the Premium Economy at booking (while paying for regular Y, what happens in that situation.

    Thanks again for all the great help and advice.
     
  10. mtkeller
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    mtkeller Silver Member

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    See the part of the original post where I wrote:

     
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  11. rwoman
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    rwoman Gold Member

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    I have had to pay the APD on miles and SWU upgrades ex-LHR.

    Got to lover HMRC!

    :)
     
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  12. MSPeconomist
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    This is an wonderfully useful and informative thread. Thanks for starting it and thanks also to those who contributed.
     
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  13. TheMadBrewer
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    TheMadBrewer Silver Member

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    I booked an award ticket in J (at low!) that was originally LAX-MSP-LHR-MSP-LAX and of course paid a bunch in taxes and fees.

    I ended up changing it to LAX-MSP-LHR/LCY-DUB(overnight, less than 24 hours)-ATL (they wanted an additional 62,500 skypesos for a 3 day stay in ATL and to go on to LAX so I just bought a OW ticket). Anyway, LCY-DUB was on CityJet (AF) in Y as they are single class planes. I don't think I got any taxes refunded, and after reading this I think I should have gotten some as I departed the UK in Y. Unless Ireland has a similar tax for J departures. Probably not any recourse as the return flights were last week. Oh well.
     
  14. MSPeconomist
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    MSPeconomist Gold Member

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    Contact DL. It sounds like they should have refunded the excess tax when you changed the ticket and the fact that you've already travelled doesn't mean that they shouldn't correct their mistake.
     
  15. mtkeller
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    mtkeller Silver Member

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    If you were in ROI for under 24 hours, you don't have a stopover there, and thus the UK tax applies. I've played with taxes on ITA a bit, and it appears that the full/reduced level of APD is determined based on the long-haul segment. Thus, leaving in Y but not having a stopover means you're going to pay the full £120 UK-US in premium cabin APD.

    I did correspond with someone on TOBB today about a MKE-DTW-CDT//LHR-MSP-MKE open jaw J award ticket. For some reason, DL.dumb didn't assess the APD on his award booking! No clue how or why, but the GB category (how APD is coded) is totally missing in his tax breakdown. I've asked him if he remembers anything strange that happened to make it reproducible but haven't heard back yet.
     
  16. mersk862
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    mersk862 Gold Member

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    A question about short trips to the United Kingdom. Say I was to fly into the UK from America at noon on Saturday and then leave on a 1000a flight on Sunday morning to return to America (in the United Kingdom for less than 24 hours). Would this still be considered a stopover, even though I'd be returning to America? I am considering doing such a trip this fall and these flight options are the ones that are most enticing to me currently. I would be in Economy for the flight into the UK (as mentioned, not subject to tax), but would be planning on sitting in Business Class on the return.
     
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  17. mtkeller
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    mtkeller Silver Member

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    A very interesting question. I played with ITA for a bit, and strangely, if you turn around on a nonstop flight from LHR to the US, you'll pay the APD. However, if you're in the UK for under 24 hours and fly to AMS or CDG before returning to the US, the APD is not being collected. Seems that the taxation scheme is seeing AMS or CDG as the final destination, even though the fare system is doing a r/t to LHR.
     
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  18. MSPeconomist
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    MSPeconomist Gold Member

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    This is even if you spend less than 24 hours in AMS or CDG?
     
  19. mtkeller
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    mtkeller Silver Member

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    Yup, standard connection there. Not even enough time to leave and re-enter the airport.
     
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  20. mersk862
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    mersk862 Gold Member

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    Interesting. I'm asking more from a non-rev point of view, as there is a BA flight that works quite well to get me over there from Phoenix and then I'd fly out the next morning. Might just take the British Midland hopper over to Dublin and go from there.
     
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  21. MSPeconomist
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    Interesting that for nonrev you don't even have to stay within your own employer's alliance. If you have a long weekend, 20-24 hours in London followed by a day or so in Paris or Amsterdam sounds awfully good. But I still find it shocking that out of PHX to Europe, your best bet is a BA flight.
     
  22. chemist562
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    chemist562 In Memorian

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    I went to the FT London DO this past Feb. I flew into LHR and out of BRU. Saved alot of $$. Took o/w Eurostar from London to Brussels. What I saved in APD covered 1 night in a nice hotel, Eurostar ticket ($62 USD), Brussels transportation, food & drink and some very nice chocolates for my wife.

    There are some BRU taxes but it is not alot. I priced a DL (revenue) itinerary (LAX-LHR, BRU-LAX) and the total taxes were approx $76.

    I like DUB so I will try to fly out of there the next time I'm in London.
     
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  23. mtkeller
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    mtkeller Silver Member

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    BRU is another easy option, given EuroStar. I should probably add it to the list since DL does operate on that route most days.

    Too lazy at the moment to try to find it myself, but I wonder how much money the UK really makes off of APD each year. The airlines and tourism industry hate it, but the Chancellor seems dead set against even talking about repealing or lowering it.
     
  24. MSPeconomist
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    I'm starting to wonder whether passenger loads are out of balance due to the APD, with many more flying into England, especially longhaul, than the numbers of departures. Maybe it's even easier to upgrade in one direction compared to the other way.
     
  25. bez7
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    I can't imagine there are enough people working the system to avoid the tax to really put load balances into question. Sure, there will be some, but the last thing most average travelers want to hear for an upcoming trip is that they'll need to transit somewhere else before flying home. And, if I'm reading it correctly, the upper class cabins are where the hurt is felt the most, so that's an even smaller set of travelers affected. I may, however, be misreading much of this and have no experience pricing or flying to/from London.
     
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