BA boss Willie Walsh backs Scottish independence if its government will then cut APD by 50%

Willie Walsh, CEO of IAG – owner of British Airways – has stirred up some publicity by declaring that Scottish independence could be a “positive development” for British Airways, if it cuts Air Passenger Duty (APD). He said the Scottish government “recognised the huge impact” air passenger duty” had on the economy and had in the past pledged to reduce, then possibly abolish, APD if there is a “Yes” vote for Scottish independence in the referendum in September. Willie Walsh has repeatedly lobbied against APD (which is charged as aviation pays no VAT and no fuel duty), and all airlines would prefer air travel to remain significantly under-taxed, to boost their revenues. In its White Paper on independence, the Scottish government said APD would cost Scotland “more than £200m a year” in lost tourism expenditure, and after a 50% cut they wanted complete abolition of APD “when public finances allow”, in a bid to make Scottish airports more competitive. That would have the effect of drawing potential air  passengers from northern English airports to Edinburgh and Glasgow airports instead.  A north-east MP said of Walsh: “For a man who leads a company that trades on its British identity, he has a very casual approach to the break-up of Britain.”

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Row as British Airways boss Willie Walsh backs Scottish independence

BRITISH Airways boss Willie Walsh came under fire last night after he backed a vote for independence – because Alex Salmond promised his airline tax cuts.

By: Dean Herbert (Express)

February 28, 2014

Willie Walsh has drawn some criticism over his possible motives for leaning Yes

Willie Walsh has drawn some criticism over his possible motives for leaning Yes [BRITISH AIRWAYS]

Mr Walsh said that SNP plans to scrap Air Passenger Duty (APD) would make breaking up Britain a “positive” thing for his airline.But North East Scottish Tory frontbencher Alex Johnstone said: “For a man who leads a company that trades on its British identity, he has a very casual approach to the break-up of Britain.”

Alex Salmond made a made a pledge to first reduce, then abolish, the duty in the Scottish Government’s white paper. The “Scotland’s Future” document said that APD could cost Scotland “more than £200million a year” in lost tourism expenditure, and that the levy would be halved and eventually scrapped.

Mr Walsh, the chief executive of International Airlines Group (IAG), which owns BA, was asked yesterday whether independence would harm his business.He said: “No, because we will continue to fly to Scotland. It might be marginally positive, because I expect the Scottish Government will abolish Air Passenger Duty, as they recognise the huge impact that this tax has. So, no, it is probably going to be a positive development, if it does happen, for British Airways.”

A spokesman for the pro-union Better Together campaign said: “Breaking up the most successful economic, political and social union in history for the sake of a tax on holidays doesn’t seem like the strongest argument.”Mr Walsh has long criticised APD, saying it forces airlines to increase the price of flights.

The company employs around 1,300 staff in Scotland, including aircraft engineers and cabin crew

His remarks came after Standard Life announced it has drawn up contingency plans around independence, including the possibility of moving some of its operations out of Scotland.The pensions giant, which is based in Edinburgh, has admitted to having concerns over the possibility of independence, including the currency and the tax regime.

BA’s parent company IAG, posted a profit of £433million in 2013, compared with losses of around £506 million the previous year.The company employs around 1,300 staff in Scotland, including aircraft engineers and cabin crew.

Irishman Mr Walsh sparked controversy in 2012, when he presided over British Airways’ £172million takeover of bmi British Midland, a move that cost around 1,200 jobs.And in 2004, while chief executive of Ireland’s national carrier, Aer Lingus, he axed 1,300 jobs in a major restructuring plan.

The Scottish Government’s Transport Minister, Keith Brown, welcomed Mr Walsh’s remarks, adding: “Willie Walsh can clearly see the opportunities of independence. A boost to tourism and travel in Scotland will have a positive impact on growth. Mr Walsh’s comments further underline the UK Government’s duty to engage properly with the issues of the independence debate.”

http://www.express.co.uk/news/uk/462442/Row-as-British-Airways-boss-Willie-Walsh-backs-Scottish-independence

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Scottish government website

Reduce Air Passenger Duty (APD) by 50 per cent.

A recent study by York Aviation estimated that APD will cost Scotland more than £200 million a year in lost tourism spend alone by 2016. In addition to the direct losses to the Scottish economy, a report earlier this year by PWC showed that reducing APD would increase other tax receipts, such as VAT[121]. A reduction in APD will allow Scotland’s airports to be more competitive in attracting new direct air routes and will improve our international connectivity. More direct routes will also enable Scottish travellers to avoid connections via airports such as Heathrow. As an early priority for action the Government plans to reduce APD by 50 per cent, with a view to eventual abolition of the tax when public finances allow. This tax cut will encourage business travel and reduce costs for families of holiday flights from a Scottish airport.

http://www.scotland.gov.uk/Publications/2013/11/9348/7

The York Aviation report (2012) is at  

http://www.glasgowairport.com/static/Glasgow/Downloads/PDF/APD-York_Aviation-report-Oct-2012.pdf

It says:

By 2016 we estimate that £210 million per annum less will be being spent in
Scotland by inbound visitors than if APD had not risen as it has since 2007. It should
also be remembered that Scotland’s airports are major employment centres in their
own right and that APD’s impact on traffic will limit the role they can play as generators
of job opportunities and prosperity. We also estimate that in broad terms the impact of
APD on other tax revenues in Scotland could be around £50 million by 2016.

[This York Aviation report omits, and most of their reports do, any mention of the impact of APD on the number of Scottish people flying out of Scotland to spend their holidays abroad. This would need to include the amount of money they take out of the country for their holidays. A full analysis of the impact of APD would need to include both inbound AND outbound trips. This study does not do that.  AirportWatch note ].

Comment on the PWC report at   http://www.airportwatch.org.uk/?p=607

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28 February 2014 (BBC)

Scottish independence: BA boss Willie Walsh ‘positive’ about impact

British Airways boss Willie Walsh said he was not making contingency plans for Scottish independence. The company employs about 1300 people in Scotland.

Scottish independence could be a “positive development” for British Airways, according to the boss of the company which owns the airline.

Willie Walsh said the Scottish government recognised the “huge impact” air passenger duty had on the economy.

The Scottish government has pledged to reduce, then possibly abolish, the duty after a “Yes” vote in the referendum.

The pro-Union Better Together campaign said the “tax on holidays” was not the “strongest argument” for independence.

Mr Walsh’s comments come after Standard Life announced it had drawn up contingency plans around independence, including the possibility of moving some of its operations out of Scotland.

The pensions and investments giant, which is based in Edinburgh, said it had concerns over a number of issues related to independence, including the currency and the tax regime.

On Friday, BA’s owner IAG posted a profit of 527m euros (£433m) in 2013, compared with losses of 613m euros the previous year.

Interviewed on BBC Breakfast, group chief executive Willie Walsh was asked whether the airline was also making contingency plans for independence.

He answered: “No, because we’ll continue to fly to Scotland.

“If anything, it might be marginally positive because I suspect the Scottish government will abolish air passenger duty, because they recognise the huge impact that that tax has on their economy.

“So no, it’s probably going to be a positive development, if it does happen, for British Airways.”

‘Boost to tourism’The company employs about 1,300 staff in Scotland, including aircraft engineers and cabin crew.

Mr Walsh has previously criticised the UK government, saying that its policies have discouraged tourism and foreign investment.

In its White Paper on independence, the Scottish government said air passenger duty (APD) would cost Scotland “more than £200m a year” in lost tourism expenditure.

It said an independent Scotland would reduce APD by 50% in the first instance, with the complete abolition of the tax “when public finances allow”, in a bid to make Scottish airports more competitive.

IAG chief executive Willie Walsh said he welcomed plans to reduce air passenger duty

Scottish Transport Minister Keith Brown welcomed Mr Walsh’s intervention, saying it recognised that Scotland was being “penalised” by Westminster policy.

He added: “Willie Walsh can clearly see the opportunities of independence. A boost to tourism and travel in Scotland will have a positive impact on growth.

“Mr Walsh’s comments further underline the UK government’s duty to engage properly with the issues of the independence debate.

“Instead, the self-styled ‘Project Fear’ are intent on wasting time engaging in their ‘dambuster’ strategy of scaremongering and attempting to bully people in Scotland to vote ‘No’.”

Scottish tourism

However, the pro-Union Better Together campaign said APD was not the “strongest argument” for independence, and that jobs would be lost if Scotland voted “Yes”.

A spokesman said: “Breaking up the most successful economic, political and social union in history for the sake of a tax on holidays doesn’t seem like the strongest argument.

“As the intervention from Standard Life made abundantly clear, leaving the UK would cost jobs here in Scotland.

“Alex Salmond’s failure to tell us what will replace the pound means companies like Standard Life and RBS, which employ thousands of people in Scotland, have warned about the big risks involved in going it alone.”

Speaking on BBC Radio Scotland’s Newsdrive programme, Michael O’Leary, chief executive of Ryanair, said he supported the position of the Scottish government in relation to the abolition of APD which he said “has done untold damage to Scottish tourism and particularly to traffic on domestic routes to and from Scotland”.

He added: “It’s not a narrow or small issue. Traffic in Scotland has declined in the past five years since travel tax has been imposed.”

But Mr O’Leary said he didn’t want to get involved in the debate about Scottish independence.

He said: “Speaking as an Irishman, that’s a matter for the Scottish people. But certainly, if the air travel tax were repealed by the UK government or an independent Scottish government, you’d see visitors to Scotland double over a five to ten year period.”

Contingency planningElsewhere, the body which represents engineering firms in Scotland has told the BBC that its members have “major concerns” about the impact of independence.

Engineering Scotland chief executive Bryan Buchan said the currency, tax rates and EU membership were the main areas of concern.

He said some big firms had drawing up contingency plans, although none had threatened to move operations from Scotland to England.

“We are seeing activity and we are, as a body, participating in assisting companies [with] contingency planning, particularly those which are foreign owned, where the parent is seeking to establish the landscape the business is operating in,” he added.

A Scottish government spokesman insisted Scotland would keep the pound after independence, as part of a formal currency union.

He added: “An independent Scotland will continue in EU membership, and the only threat to that is Westminster’s proposed in/out referendum which risks taking Scotland out of the EU against its will, with huge consequences for jobs, investment and prosperity.”

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-26383990

 

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Analysis

James Cook

Scotland Correspondent, BBC News

Few companies embody Britishness like the flag carrier of the United Kingdom.

From its name to its red, white and blue insignia, British Airways feels resolutely unionist.

It was founded in 1924 as Imperial Airways, boasting that it was the government’s “chosen instrument of air travel”.

But such history and sentimentality do not appear to matter much to the man who now runs BA’s parent company, Willie Walsh.

His suggestion that the skies would be brighter for business in an independent Scotland comes as soothing music (Lakme’s Flower Duet, presumably) to the ears of campaigners for independence.

They have not relished the past few weeks as first the boss of BP and then Scottish financial giants RBS and Standard Life raised concerns about the impact of a “Yes” vote.

If the “Yes” campaign is going to win the battle for business it could do with a few more firms of BA’s stature flying by its side.

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