The tourism industry has welcomed chancellor George Osborne’s announcement in yesterday’s budget that the government would reform Air Passenger Duty (APD), an amendment it says was long overdue.

Osborne pledged to abolish the higher Bands C and D of APD, making long haul flights to growing destinations like China, India and the Caribbean cheaper for those leaving and visiting the UK.

The UK currently lags most of its rivals in terms of aviation tax competitiveness, with the World Economic Forum ranking it 138th out of 140 countries in a 2013 study.

At present, the tax measure is calculated by the distance between London and a nation’s capital city. Osborne said it was "crazy and unjust" that Britons travelling on eight-hour flights to Barbados paid more APD than those on 11-hour flights to California.

APD bands C and D will be scrapped from next April, so passengers on long-haul flights will only pay the rate currently levied on those going to the US, a move the Tourism Alliance says will reduce the cost of visiting the UK by up to £108 per person.

“The UK tourism industry has been at the forefront of the UK’s economic recovery, with the ONS finding it has created a third of all additional jobs in the UK economy over the last three years,” said the association’s chair, Ufi Ibrahim.

“The Government, in making this cut, has signalled its recognition of the benefits this industry provides to the country. However, the UK is not alone in seizing the opportunity proved by tourism and more needs to be done to address other competitiveness issues such as visas, aviation capacity and VAT.”

CEO of online travel agency loveholidays.com Al Francis described the move as a step in the right direction and called on the government to follow Ireland’s example by scrapping its equivalent Air Travel Tax completely.

He added: “We expect to see a spike in enquiries for holidays to Caribbean favourites such as The Dominican Republic, Jamaica and St Lucia as travellers realise that APD charges for these islands will fall.”

Tourism is currently the fifth largest industry in Britain. It generates £134bn per annum for the UK economy and is the UK’s third largest export earner.