Holiday firm margins hit by air tax

First Choice Holidays today said soaring fuel costs and the recent doubling in air passenger duty were hitting profit margins at the group.

The holiday firm, which last month announced it was to merge with the tourism unit of German rival TUI, said its plan to focus on long-haul flights was helping offset a weaker short-haul market.

But First Choice added the increase in passenger sales to far-flung destinations such as Cuba and Costa Rica was failing to recoup losses from the rise in tax, which was increased by the British government in February to as much as £40 (€58) per passenger for long-haul flights.