The measure, which would come into force in April next year, was announced on Tuesday.
Savings can already be made for passengers flying out of Irish airports, particularly on long-haul trips to destinations including the USA.
But more people crossing the border to take advantage of the lower costs would have a negative impact on airports in Northern Ireland.
“Any tax or regulation prevailing in Northern Ireland which makes our gateways less attractive than those across the border is entirely retrograde with regard to economic development,” a spokeswoman for Belfast International Airport told UTV.
“Northern Ireland is ‘peripherality personified’ – tucked away at the north of an island, off an island, off a continent.
“We urgently need to grow trade, tourism, investment and employment, and access facilitators are central to achieving these aims.”
Air Travel Tax was €3 per passenger, whereas for flights departing our regional airports for Britain, for example, the rate is £13 per passenger – over 400% higher.
Daithí McKay, Sinn Féin
However, a spokesman for George Best Belfast City Airport said the reduction to a zero cost of tax was unlikely to “cause a stampede to Dublin”.
“The Republic’s air passenger duty (APD) is currently only €3 per departing passenger,” he explained.
“That said, passengers are aware of the high rates of APD in flying to short-haul destinations from Northern Ireland.
“Belfast City Airport will continue to work with the Northern Ireland Executive to ensure access to Northern Ireland, via aviation, is as attractive as possible.”
Sinn Féin’s Economy spokesman Daithí McKay has called on DUP Finance Minister Simon Hamilton to follow the lead of the Irish government when it comes to air travel tax.
“Immediate action is required to level the playing field and to stimulate aviation growth” he said.
“In turn, this will ultimately lead to the creation of new jobs, increased tourism, and help drive overall economic growth.”
The SDLP’s Patsy McGlone, chairman of Stormont’s Enterprise Committee, said the impact on Northern Ireland was “deeply concerning”.
He added: “I have previously argued that the Assembly should have the power to set the rate of Air Passenger Duty, not just on long-haul flights, but on short-haul flights also.
“With responsibility for the short-haul duty rate devolved to the Assembly, we could fully co-ordinate our policy on Air Passenger Duty with our counterparts in Dublin to remove the disparity in rates for the benefit of the economy across this island.”
Meanwhile, half of the Irish government’s senior ministers narrowly missed the Budget announcement after getting stuck in a lift.
Transport Minister Leo Varadkar and others, including Tanaiste Eamon Gilmore, emerged from final Cabinet talks only to get stuck in Government Buildings.
The Budget delivered a total of €2.5bn worth of tax hikes and spending cuts.
Among the pertinent details was a 10 cents rise in tobacco duty, making the Republic the second most expensive place in the world for smokers.
A pack of 20 cigarettes will cost around €9.50 (£8.03).
The excise duty on a pint of beer or cider and on a standard measure of spirits is to go up by 10 cents, while the duty on a bottle of wine is to increase by 50 cents.
Finance Minister Michael Noonan said it could have been worse, but he recognised that “people have already made many sacrifices”.
He added that by the time the Budget measures are passed into law on 1 January 2014, the Republic should have left its bailout programme.
Ryanair responds to scrapping of Irish air travel tax
The company is discussing plans to add new routes or additional frequencies on existing routes
Ryanair has said it aims to increase its traffic at Irish airports by one million passengers a year after the Irish government scrapped an air tax.
The airline said its move was in “direct response” to the scrapping of the travel tax, announced in the Irish budget on Tuesday.
The Irish air travel tax is three euros (£2.50) per passenger, per flight, but will be abolished from April 2014.
Ryanair said the abolition helped to “restore Ireland’s competitiveness”.
The tax was introduced at Irish airports almost five years ago.
The airline said that that during that period, “traffic at the main Irish airports had declined from 30.5m passengers in 2008 to 23.5m in 2012”.
The period also coincided with the international economic downturn, with the Republic of Ireland suffering one of the deepest recessions in the eurozone.
In a statement, Ryanair said it believes that much of the Republic’s lost airport traffic “can now be recovered thanks to the abolition of the travel tax, which makes Ireland a more competitive and attractive destination for inbound visitors, particularly those on short flights from the UK and Continental Europe”.
The airline has invited staff from airports in Dublin, Cork, Shannon, Knock and Kerr to meetings in the Irish capital on Thursday and Friday to discuss its growth plans.
Michael Cawley from Ryanair said they would discuss “how and where we can add new routes or additional frequencies on existing routes” from next April, in an attempt to achieve their targets.
Ireland to go for flat rate flight tax of €3 from March to December 2011
by Ailish O’Hora
The Irish Government stopped short of axeing the controversial air travel tax
but instead changed it to a flat rate of €3.
Previously the charge was €2 for a short flight (less than 300km) and €10 for
a long-haul flight.
Finance Minister Brian Lenihan said the move, which takes effect from March,
would help the tourism industry which has taken a hit in the past year.
But he warned airlines such as Ryanair, which has been blaming the tax for lower
tourism figures, that the move is a temporary measure and would be reviewed next
“I do not want to see the reduction in tax being used by airlines as an opportunity
to raise their fees and charges,” Mr Lenihan said.
He added that other tourism incentives would be introduced by the Dublin Airport
Authority, including a full rebate on charges for any additional traffic above
Recent figures show that 858,600 fewer tourists came to Ireland in the first
nine months of 2010. The annual decline from Britain, Ireland’s largest market,
Ryanair, which had promised to increase the number of passengers here by six
million in return for the tax being abolished, condemned the reduction as a half
measure, adding that it had to be reduced under EU rules.
The two-rate system that applied here breached EU regulations. The charge of
€10 applied to flights from Ireland further than 300km and €2 for shorter trips
to parts of Britain and internal flights.
“Today’s Budget proves, yet again, that this Government has no tourism policy,”
said Ryanair boss Michael O’Leary.
“The reduction in the €10 tax to €3 was forced on them by the EU Commission’s
infringement proceedings and will bring in less than €35m per annum.”
The tax reduction and incentives were welcomed by Tourism Minister Mary Hanafin.
She said that while implementing the measure would mean the Government taking
in €56m less in tax, the knock-on benefits would be felt throughout the wider
industry which would help support the 250,000 people employed in tourism, culture
The Budget provides €400m in funds for the three sectors, including almost €148m
for tourism and €150m for culture.
Tourism industry representatives said the changes were positive, especially the
reduction in the travel tax.
“The capital commitment of €25m to tourism product development is also welcome
and will allow for important new products and enhancement of existing products,”
Irish Tourist Industry Confederation chief executive Eamonn McKeon said.
Other countries that have air ticket taxes:
The UK, Germany and Austria have air ticket taxes. http://www.airportwatch.org.uk/?p=4444
Spain also has an air ticket tax, and France has a Passenger Solidarity Tax http://www.airportwatch.org.uk/?p=2585