Glasgow, Edinburgh and Aberdeen airports call for end to Air Passenger Duty in Scotland
The 3 airports have made a joint submission to the Smith Commission (looking into extra powers for the Scottish Parliament) calling for Air Passenger Duty (APD) to be devolved to Holyrood, and eventually abolished. The airports claim APD is a significant barrier to growth and damaging to tourism, though this ignores the outflow of Scots abroad – facilitated by cheap flights – taking their holiday money to spend elsewhere. Of the £2.9 billion raised by APD in 2013-14, approximately £200m came from Scotland. APD is charged by the Treasury as a means of, partially, compensating for the tax loss caused by aviation paying no VAT and no fuel duty. Scotland is more dependent on flying than the south of the UK, as rail journeys to Europe take much longer. A report by York Aviation for the airports in 2012 suggested that having to pay APD means the country loses (?) some 2 million passengers per year, and could cost the Scottish economy up to £210m in lost tourism spend by 2016. The report is completely silent on the cost of outbound tourism, which is not even mentioned. Airports in the north of England fear APD being dropped in Scotland.
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Three Scottish airports call for end to Air Passenger Duty
28.10.2014 (BBC)
Edinburgh is one of three Scottish airports to call for Air Passenger Duty to be devolved to Holyrood
Glasgow, Edinburgh and Aberdeen airports have made a joint submission to the Smith Commission calling for Air Passenger Duty (APD) to be devolved to Holyrood and eventually abolished.
The Smith Commission is looking into extra powers for the Scottish Parliament.
The three airports claim the tax is a significant barrier to growth and damaging to tourism.
Four other countries in Europe levy a passenger departure tax.
The tax raised £2.9bn in 2013-14, with approximately £200m coming from Scotland.
The airports made the case for the devolution of the tax, an excise duty set by the UK government, to Holyrood. This would allow for its reduction and eventual abolition in line with the Scottish government’s commitment.
APD has been increased and restructured by the UK government since 2007, with long haul rates increasing more than short haul.
The submission stated that Scotland’s location and the fact its economy is particularly reliant on aviation meant that any loss of connectivity would have “a significant impact on the country’s competitiveness”.
Their joint submission argued that the tax costs Scotland two million passengers every year. The 2012 report [ by York Aviation ] also warned that APD will cost the Scottish economy up to £210m in lost tourism spend by 2016.
Zero rate
APD rates on direct long haul flights from Northern Ireland were devolved to the Northern Ireland Assembly (NIA) in 2012, which then set the rates at £0. The Republic of Ireland scrapped its equivalent of the tax in 2013, meaning the UK is one of five European countries to levy a tax on passenger departure.
Gordon Dewar, the chief executive of Edinburgh Airport, said: “Scotland’s airports unanimously agree that air passenger duty is hugely damaging to our industry. We’ve argued long and hard for its reduction or abolition and have been ignored but now the evidence for its devolution to Scotland speaks for itself.”
Mr Dewar said that Ryanair had already committed to delivering over one million new passengers if APD were to be abolished.
In published proposals, the Conservative party said that APD “should be devolved”, while the Liberal Democrat party said APD for flights from Scottish airports should be allocated to the Scottish Parliament.
Labour said it was “not now convinced that devolution should be progressed until further consideration is given to the environmental impact and how else this tax might be reformed”.
Colin Keir, the SNP MSP whose constituency includes Edinburgh Airport, described the submission as “very welcome indeed”.
He said: “The case for the devolution of APD has been made – today’s submission from the airports has demolished any remains of Labour’s threadbare argument against it. Labour in Scotland could start to show that it is Scotland, not Westminster, in control by dropping its opposition and supporting the devolution of APD.
“Assuming this common sense submission is taken forward by the Smith Commission in its proposals – the pressure will be on David Cameron and the Westminster system to act immediately and devolve the powers over APD at once.”
http://www.bbc.co.uk/news/uk-scotland-29802846
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Related BBC stories:
York Aviation report, which completely ignores any mention of the cost to Scotland of outbound tourism, is at http://www.aberdeenairport.com/media/1071/rpt_apd_impact_update_oct_2012_final.pdf
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Scottish airports want APD lowered and control of it devolved to the Scottish government
6.12.2014 (BBC)
Scottish airport operators have said they are dismayed and disappointed that the control of air passenger duty (APD) will not be devolved to Scotland.
The UK government gave Northern Ireland the power to reduce the level of the tax because it said it had a special economic case.
That prompted calls from Scottish and Welsh airports for similar treatment.
The UK Treasury said it had not ruled out devolving APD to Scotland and Wales in the future.
A report published following a consultation on reform of APD said the government at Westminster would “continue to explore the feasibility and likely effects of devolution to Scotland and Wales”.
Earlier this year Chancellor George Osborne announced the duty would be cut for direct long-haul routes from Northern Ireland airports, and he would devolve control over the tax to the Northern Irish Assembly.
The move came in response to fears that some routes could be scrapped due to competition from Irish airports where APD is much lower.
Commenting on the UK Government’s decision not to grant the Scottish government similar powers for now, Jim O’Sullivan, managing director of Edinburgh Airport, said: “APD is already costing Scotland passengers and having an impact on tourism revenues.
“We know from discussions with our airline partners that it is a major factor in their decision to connect further routes to Scotland.
“We would urge the Westminster Government to see Scotland as it does Northern Ireland and understand the need to both reduce and devolve this unfair and damaging tax.”
Amanda McMillan, managing director of Glasgow Airport, said: “On the question of devolution of APD, Glasgow Airport has always been supportive of this proposal given the Scottish government’s more progressive approach to aviation and its greater appreciation of the role the industry plays in supporting the growth of the Scottish economy.”
Scottish Transport Minister, Keith Brown said the case for devolving APD was “compelling” and had been backed by all four of Scotland’s biggest airports, and recommended by the Calman Commission.
He added: “We need to be able to deal with the competitive and connectivity disadvantages that Scotland faces and if APD were devolved now we could provide the means to incentivise airlines to provide new direct international connections to Scotland, benefiting our aviation industry and our passengers and supporting the growth of the Scottish economy.
“The UK government needs to listen to the many voices in Scotland who clearly want to see full devolution of the policy on APD.”
http://www.bbc.co.uk/news/uk-scotland-scotland-business-16055896
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See also
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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Newcastle and Manchester Airports oppose devolution of APD powers to Scotland
MINISTERS are facing a backlash from English airports over plans to devolve power
on aviation taxes amid fears it could lead to an exodus of passengers travelling
north of the Border to catch flights.
The Scottish Government has promised to lower Air Passenger Duty (APD) to cut
fares and encourage the development of new routes. It has been pushing Westminster
to honour a commitment to hand over responsibility for the tax to Holyrood.
However, it has faced an angry response from Newcastle and Manchester airports,
which claim introducing a lower rate in Scotland would put them at a competitive
disadvantage as passengers would drive north to get better flight deals.
Airport sources say this would also potentially stem the flow of Scottish passengers
travelling south for cheaper flights.
Both English airports have pointed to the example of Belfast International, which
has lost a stream of passengers to Dublin since the republic decided this year
to scrap its aviation taxes.
There is no good reason why passengers in Scotland should have to travel in such
numbers through other UK airports Graeme Mason, Newcastle International’s planning
and corporate affairs director, said the devolution proposals, which are being
considered by the Treasury, would be “devastating”.
“The devolving of powers to Scotland, Wales and Northern Ireland to vary APD
would be devastating to other UK regions,” he said. “The north-east would be particularly
damaged, with air services and passengers relocating north of the Border.”
Both airports have called for variable rates of APD to be considered for across
England.
The UK Government had intended to devolve responsibility for APD but reversed
its position while it examined a Coalition commitment to replacing the per-person
tax with a more environmentally-friendly per-aircraft tax.
Chancellor George Osborne then dropped the APD reforms in his March Budget, saying
they would not be legal, but included proposals to devolve responsibility forr
the tax to Scotland, Wales and Northern Ireland in a consultation which ended
last month.
An industry source said UK Government ministers were reluctant to put English
airports at a disadvantage and were also hostile to the idea of introducing a
two-tier tax system. The source said: “They were serious about reforming Air Passenger
Duty. But now that’s been dropped, there’s no way they want to see a variable
rate introduced between England and Scotland.”
A likely compromise would be to hand over power for collecting the tax – worth
£157m in Scotland – but not the power to vary it, the source claimed.
The Treasury insisted no decision had been taken on devolving APD but reforms
would be made on a “revenue-neutral basis”. A final decision is due in the autumn.
A spokeswoman for Manchester Airport Group said it was not against devolution
of APD but would object to reforms that disadvantaged English regions.
“We would be concerned if the Government were to devolve powers to Scotland without
taking into account the effect it would have on airports in the north of England,”
she said. “We have urged the Government to look at a differential rate of APD
more broadly if it is serious about stimulating airport growth, given the capacity
constraints in the south-east of England.”
A spokesman for Transport Scotland, the agency with responsibility for aviation
policy, said: “While we would not seek to displace services which operate from
other UK airports, there is no good reason why passengers in Scotland should have
to continue to travel in such numbers through other UK airports or should not
benefit from levels of connectivity enjoyed in other parts of the UK.
“The case for devolution is growing with Scotland’s four largest airports supporting
the Scottish Government’s call that Air Passenger Duty be devolved to ensure the
interests of passengers in Scotland are supported.”