Passengers are warned to expect higher fares as airports, including Manchester, Bristol and Birmingham, are among the hardest hit by tax increases.
With airports across the UK being hit by steep rises in business rates as a result of increased property tax this year, passengers are being told to brace for a rise in ticket prices.
Analysis of government figures by PA Media has revealed that regional airports across the UK are expected to be among the worst affected by rising property taxes following an overhaul of property valuations.
A nationwide revaluation of commercial properties is set to trigger some of the steepest business rate increases seen in decades. Although primary air transport hubs, including Heathrow and Gatwick, will also be hit by the hike in property tax, smaller and mid-sized airports are likely to bear the biggest financial burden.
The increase in business rates follows the latest national property revaluation. Analysis of the government’s Valuation Office Agency (VOA) data by global tax firm Ryan for PA Media, shows that rateable values for many airports outside the UK capital have increased more than sixfold.
Commercial properties are revalued by the VOA as part of a regular cycle. These revaluations are based on updated information outlining how these facilities are performing financially. As a result of airports across the UK seeing record passenger traffic and generating more revenue following COVID-19, the VOA determines this as a sign of increased value. When a property’s rateable value increases, so too does the amount an owner or operator must pay in business rates.
Even with transitional relief, which has been introduced to cap initial increases at 30% next year, regional airports will be hit with some of the largest cash increases in the country.
Manchester Airport is expected to pay an extra GBP4.2 million per year, meaning its business rates will increase to GBP18.1 million in 2026, according to Ryan’s data.
Bristol Airport, meanwhile, will face an increase of around GBP1.2 million to GBP5.2 million, and Birmingham International will be hit with an increase of around GBP1.8 million to GBP7.6 million. Newcastle Airport will see its business rates rise by around GBP244,755, taking its business rates bill to GBP1.1 million. Other smaller airports, such as Bournemouth, will also see six-figure increases.
The Independent reported that Alex Proby, Practice Leader for Europe and Asia Pacific property tax at Ryan, told PA: “With an unprecedented 295% sector-wide uplift, regional airports simply cannot absorb a cost shock of this magnitude.
“These increases will inevitably flow through the system: first into airport charges, then into airline costs and ultimately into ticket prices.”
The tax hike is also expected to impact investment in infrastructure, with some airports and operators rethinking plans to invest amid the higher-than-expected tax bills.
