Charter airlines have failed to cut fares on flights to the most popular holiday destinations this summer even though air passenger duty has been halved.

Chancellor Gordon Brown cut the tax on economy flights within the European Union from £10 to £5 on 1 April, but the saving is not being passed on to charter passengers.

Operators selling seats on charter flights claim the £5 saving has been swallowed up by an increase in costs, including higher fuel charges and a weakening of the pound against the US dollar, which is the currency used to buy fuel.

Rob Thompson, general manager of JMC Airfares, which sells a large number of seats on holiday charters to the Mediterranean, said: 'If the tax had not gone down we would have had to increase our fares, this has allowed us to keep them at about the same level as last year.'

Some fares have gone up, however. Avro, which claims to be the largest wholesaler of charter flights, said its fares were on average two per cent higher than last year.

Holidaymakers buying seats in the premium cabins on long-haul charter flights face a much bigger increase, as the tax on business class-type fares outside Europe has doubled to £40. Operators say they have had no choice but to pass this increase on to customers.