A group of UK tour operators launched a High Court challenge over the legality of air passenger duty (APD) today.

The charge, introduced by a Conservative government in 1994 and currently estimated to raise £2 billion, is condemned by tour industry chiefs as an unlawful “stealth tax”.

In December last year Gordon Brown, then Labour Chancellor, announced - in his pre-budget report - the doubling of APD with effect from February 1 this year.

The tour operators say the stated Treasury aim was to reduce air travel in a carbon saving measure for the benefit of the environment, as well as raise revenue.

But the Treasury appeared to have “simply overlooked” its effect on package tour operators, who were legally barred from passing the increases on to customers already booked for winter and summer holidays.

Today the Federation of Tour Operators (FTO) and two of its member companies - Tui UK and Kuoni Travel - asked Mr Justice Stanley Burnton, sitting at London’s High Court, to rule that the increases were unlawful.

They also contend that APD as a whole is an “unjustified interference with fundamental freedoms”.

Lawyers for the Treasury say the legal challenge is “misconceived” and the increase is a proportionate response to legitimate “revenue raising and environmental aims”.

Charles Haddon-Cave QC, for the FTO, told the court tour operators were shocked by the doubling of the tax.

FTO members - 12 major tour operators who annually accounted for some 15 million package holidays, or 65 per cent of the UK market - had already booked some four million package holidays which attracted the higher rate when the increases bit.

Unlike airlines, they were prevented by law from asking their customers to pay surcharges to meet the unexpected new costs.

This left them with an additional tax burden of “something approaching £50 million”, said Mr Haddon-Cave.

The overall value of the APD increase was some £800m-£900m, and it was estimated that the entire tax now raised about £2 billion annually.

The barrister defending the Treasury’s actions today was David Anderson, QC, who yesterday won an 11th-hour High Court reprieve for Shambo the sacred Hindu bull facing slaughter after testing positive for bovine tuberculosis.

Mr Haddon-Cave said: “This is one Treasury bull he cannot save.”

The hearing is expected to last three days.

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