RYANAIR could double the size of its presence in Scotland within two years if the country abolished “penal” air passenger duty (APD), its chief executive has predicted.
Michael O’Leary, who last week revealed the carrier would expand its number of services out of Edinburgh after the demise of Virgin Atlantic’s Little Red domestic offshoot, said: “The Scots have done a great job in frightening the bejesus out of the establishment at Westminster.”
O’Leary told Scotland on Sunday that APD was one of the key reasons why Prestwick and Aberdeen – from which Ryanair withdrew in 2011 – have not been able to secure more domestic routes.
He said: “At £13 it’s a penal tax. The routes that could offer the best traffic would be the short-haul domestics like Belfast or London Luton. But those need £9.99 air fares and you can’t have those with £13 APD at both ends of the route.”
The Scottish Government estimates APD will cost Scotland more than £200 million a year in lost tourism spending alone by 2016, and pledged to halve the levy if voters opted for independence, “with a view to eventual abolition of the tax when public finances allow”.
Paul Simmons, chief commercial officer of Flybe, last week said it would increase the number of routes it operates out of Edinburgh Airport if APD was devolved to the Scottish Parliament and cut.
O’Leary said: “Clearly, one of the things that will be devolved will be APD, and it’ll be interesting to see whether the SNP lives up to its promises that it will be abolished. It would be a huge boon for air traffic and tourism.”
On a visit to Edinburgh, the Ryanair boss said the budget airline could double the number of passengers it flies in Scotland if the country were to follow Ireland’s lead in abolishing the levy. He said: “The Irish government asked us how Ryanair would respond if they scrapped it, and we said we’d deliver 1.25 million new passengers in the first year – we’ve delivered 1.75 million. After five years of decline there’s a tourism boom in Ireland this year, and they’re all running round claiming credit for it, but it’s entirely due to the government’s decision to scrap APD.”
He added: “We’re working on a campaign with Edinburgh, Glasgow and Prestwick airports that says if APD is scrapped in Scotland we will double in size over a two-year period. So we would go from 3.5 million to 7 million passengers in two years, with 1.5 million more at Edinburgh, and one million more at Glasgow and Prestwick.”
O’Leary said growth on this scale would deliver inward investment and job creation equivalent to “four or five US multinationals” setting up operations north of the Border. “If we were to deliver 3.5 million more passengers, that would be 3,500 new jobs directly at the airports. There’s a huge potential here and the tourism spending, the VAT receipts and the tax from the jobs would far outweigh the loss of APD.”
In its submission to Lord Smith’s commission, which has been tasked with agreeing more devolved powers, the Scottish Government said that Holyrood should have “full autonomy” for APD, along with other levies such as income tax, national insurance, inheritance tax and fuel duty.
Deputy First Minister Nicola Sturgeon said: “Our proposals are aimed at boosting our economy, and I firmly believe that these powers – including full fiscal responsibility and control of key economic levers – will achieve this.”