Under the current rules, a Manchester-Aberdeen return flight attracts the £13 APD fee on both legs of the journey, while a Manchester-Amsterdam return incurs only the £13 fee, making domestic flights relatively uncompetitive.
The UK government says that European Union rules prevent airlines from waiving the fee, but has hinted that this could change following Brexit.
Dale Keller, chief executive of Bar UK, the Board of Airline Representatives in the UK said: “The government has told us there is nothing they can do because APD is based on distance bands and they can’t change this – Amsterdam and Paris are closer to London than Edinburgh.”
Keller said this put airlines like Flybe at a disadvantage. Heathrow has tried to alleviate the situation by announcing a £15 landing fee discount for domestic flights, but Keller said other carriers were effectively funding this. “Part of the reason Heathrow is having to do this is the £26 APD,” he said.
Bar UK will continue lobbying until next autumn’s Budget, which will be the last before Brexit.
Adrian Parkes, chief executive of the Guild of Travel Management Companies, added: “We would urge the government to put words into positive action by implementing a significant reduction in Air Passenger Duty which for too long has stifled business travel and economic growth.
“The next important step would be to review the increase in rates to premium economy and business class long-haul flights. APD presents a very real barrier to growth and a government review is long overdue.”