Rachel Reeves Budget Update: Why UK Holidaymakers Face 'Inevitable' Airfare Hikes

British holidaymakers and business travellers may face higher flight costs as regional airports prepare for a rise in property taxes.

Under new government valuations, these essential transport hubs are set to see their business rates skyrocket, a move that experts warn will inevitably be passed down to the consumer in the form of higher ticket prices.

Airports across the United Kingdom are adjusting to a major overhaul of property valuations, resulting in some of the highest tax increases in the sector.

While larger hubs such as Heathrow and Gatwick are affected, regional airports that provide important local connections are facing the greatest financial pressure.

Unprecedented Business Rate Hikes Threaten Regional Growth

Recent analysis of official government data has revealed a grim outlook for the aviation sector as the new 'rateable values' come into effect. Global tax firm Ryan has calculated that some airports are seeing these values increase more than sixfold, creating a cost shock that many simply cannot absorb.

Alex Probyn, who leads property tax for Europe and Asia-Pacific at Ryan, described the situation as an 'unprecedented' challenge for the industry. He noted that with a sector-wide uplift of nearly 300 per cent, regional airports will have little choice but to pass these costs onto airlines, which will then reflect them in passenger fares.

Although the government has implemented transitional relief to cap annual increases at 30 per cent next year, the long-term forecast remains bleak. Most airports are still expected to see their total business rates bills more than double over the next three years, placing a massive strain on their operational budgets.

How The Business Rate Hikes Impact Major UK Hubs

The financial impact is already becoming clear for some of the country's most prominent airports outside of London. Manchester Airport is currently amongst the worst affected, with its annual tax bill forecast to rise by a staggering £4.2 million, bringing its total to £18.1 million next year.

In the southwest, Bristol Airport is preparing for a £1.2 million increase that will take its bill to £5.2 million. Meanwhile, Birmingham International Airport is expecting a £1.8 million climb to £7.6 million, and Newcastle International Airport faces a rise of nearly £245,000, bringing its total to £1.1 million.

The scale of these increases is forcing major operators to reconsider their long-term strategies and future growth plans. A spokesperson for Manchester Airports Group pointed out that they are already one of the highest payers of business rates in the country, but this latest 100 per cent increase is particularly damaging.

This tax grab is reportedly forcing a rethink on planned investments of more than £2 billion that were slated for the next five years. As the spokesperson bluntly put it, 'It is inevitable that air travel will become more expensive' as these costs are filtered through the system.

AirportsUK, the trade body representing the industry, has criticised the government's approach as short-sighted and potentially harmful to local economies. They are currently preparing a formal response to the Treasury's consultation on business rates, which is due to close in February, urging a complete rethink of how these taxes are calculated to ensure they support rather than hinder the aviation sector's growth.