Queen’s Bench Division

Published October 9, 2007

Regina (Federation of Tour Operators and Others) v HM Treasury and Others

Before Mr Justice Stanley Burnton

Judgment September 4, 2007

The doubling of air passenger duty at seven weeks’ notice was not unlawful.

Mr Justice Stanley Burnton so held in a reserved decision in the Queen’s Bench Division in dismissing an application for judicial review brought by the Federation of Tour Operators, Tui UK Ltd and Kuoni Travel Ltd against the decision of the Treasury to refuse to postpone or modify the introduction of the increase in the duty.

Mr Charles Haddon-Cave, QC and Mr Tim Ward for the claimants; Mr David Anderson, QC and Miss Sarah Lee for the Treasury; Mr Clive Lewis, QC and Mr Ben Hooper for the Attorney-General, intervening on behalf of the Speaker of the House of Commons.

MR JUSTICE STANLEY BURNTON said that on December 6, 2006 the Chancellor of the Exchequer announced, in his preBudget report, the doubling of air passenger duty with effect from February 1, 2007, only seven weeks later.

Unlike airlines, tour operators, who sold package holidays, were largely precluded, by the Package Travel, Package Holidays and Package Tour Regulations (SI 1992 No 3288), from passing the increase on to those of their travelling customers who had already booked their holidays.

The tour operators immediately brought that to the attention of the Government who refused to postpone or modify the introduction of the duty.

The claimants contended that the increase in air passenger duty was unlawful, and that the duty itself had always been unlawful. They contended that the imposition of the duty was: (i) in breach of Article 15 of the 1944 Chicago Convention on International Civil Aviation, which had been incorporated into municipal law by the European legislation on the creation of a single European sky; (ii) that the increase in the duty, imposed in the manner in which it was, infringed their rights to protection of property under article 1 of the First Protocol to the European Convention on Human Rights; and (iii) that the imposition of the duty or its increase was contrary to article 49 of the European Treaty.

It was common ground that the implemen-tation of the increases in duty with effect from February 1, with no exception for bookings made before December 6, 2006, cost the members of the Federation of Tour Operators some £40 to £50 million.

The duty at the increased levels realised about £2 billion a year for the Exchequer. Thus the financial consequences of the claims were very substantial.

Because it had been the subject of legislation, the claimants’ challenges were necessarily confined to those applicable to an Act of Parliament.

Most significantly, they had been unable to challenge the decision to increase the duty with effect from February 1 on the ground that the Government failed to take into account a material consideration, namely the provisions of the 1992 Regulations restricting the ability of the holiday operators to recover the duty from their customers.

Thus, they submitted, the challenges had been based on European law, which took precedence over municipal law, and the European Convention on Human Rights, incompatibility with which would result in a declaration of incompatibility and in remedial legislation.

In his Lordship’s judgment, none of the grounds of challenge was well founded.

Solicitors: Herbert Smith; Solicitor, Revenue and Customs for Treasury Solicitor; Treasury Solicitor.

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