Airport boss and airlines pressure MSPs to slash passenger duty

Ryanair said would grow Scottish traffic if APD was cut. Picture: Neil Hanna

The minority Scottish Government has pledged to halve air passenger duty (APD) to attract more routes and boost tourism - but all four opposition parties oppose the scheme.

The Conservatives are not convinced of its merits while the other parties fear the environmental impact of more air traffic.

But Edinburgh Airport chief executive Gordon Dewar believes both Conservative and Labour MSPs can be won over by the benefits to the economy and jobs of cutting APD.

He said the aviation, tourist industry and business groups such as chambers of commerce would be “talking to a lot of MSPs” in an attempt to gain their support.

Finance secretary Derek Mackay has told an industry forum on the issue that ministers intend to press ahead their plans, despite the SNP losing its majority in last month’s election. Halving APD is expected to be included in the draft Scottish budget this autumn.

The planned cut would reduce APD per passenger from £13 to £6.50 for flights up to 2,000 miles, and from £73 to £37 for longer journeys. APD is charged only on flights from UK airports.

The Conservatives said they were not opposed in principle to cutting APD, but had still to be convinced and will be reviewing the issue.

Edinburgh Airport said several new Tory MSPs had indicated support for cutting APD before they were elected.

The moves come as EasyJet, Scotland’s biggest airline, revealed it has now made a written commitment of its plan to increase flights by 30 per cent if APD is halved.

Airlines are pushing for the APD cut to be confirmed by this autumn to give them 18 months to plan extra flights and routes to coincide with the reduction being introduced in April 2018.

The Scottish Government has said that is the date when power over APD is devolved, as agreed with the UK Government under the Scotland Act.

Its consultation on the plans closed on Friday but ministers have yet to announce the timing of the APD cut, and whether it will be made as a single reduction or in stages.

Industry sources said the Scottish Government’s focus was on getting its plans approved rather than meeting airlines’ expectations over when the cut would be introduced.

British Airways and Thomson Airways are also lobbying for the reduction, but some airlines have admitted APD has not affected their expansion in Scotland.

They include Jet2, which has announced it will increase routes from Edinburgh by four to a record 29 next year, when seat numbers will be increased by one third.

Other carriers, such as Delta, Etihad and Qatar, have also said the tax has had no influence on their development plans.

Dewar said he was sure enough MSPs would back the plans for them to be approved.

He said: “I’m really confident we will be able to persuade more than enough people that it’s the answer. We do not need that many.

“The Tories are the most likely to be persuaded by the arguments, and I would hope that Labour is persuadable on jobs.”

Dewar claimed a 50 per cent cut in APD would create nearly 10,000 jobs and add more than £300m gross value added to the Scottish economy a year.

The airport chief said the boost would come from extra passengers and flights, with an extra 18m people forecast to use Scotland’s airports between the cut being confirmed and 2021.

Dewar also disputed claims that the cost of halving APD - at least £150m a year being returned to the UK Treasury - would leave a hole in the Scottish Government’s budget.

He argued that this would be offset by the increased income tax and lower welfare payments from the jobs created, and extra VAT from more visitor spending.

EasyJet UK director Sophie Dekkers was also optimistic of the APD cut being approved with Conservative backing.

She said: “I’m told it will still probably go through, but it won’t be plain sailing.”

The airline’s written commitment would add 1.5m passengers to its current 5.5m a year in Scotland.

Dekkers said this would come from a combination of more frequent flights and new routes, which could include to Germany, Italy and Spain.

However, she warned that only a 50 per cent cut in one go would have any effect.

She said: “If there is a 10 per cent reduction, there will be no change in our capacity. The Scottish Government will be cautious about watering that down.”

Dekkers admitted the planned £6.50 APD cut amounted to only about 10 per cent of EasyJet’s £61.35 average one-way fare.

She also said the airline was likely to grow in Scotland by 5-10 per cent in 2018 even if APD remained unchanged.

Ryanair said it was more sceptical of ministers intentions. Its spokesman said: “The SNP had already backtracked on APD before they lost their overall majority, by delaying planned cuts until after 2018 and then only by 50 per cent.

“Perhaps this affords them the opportunity to avoid having to cut APD at all?

“Their original plan was to abolish APD and their new plan is to cut it in half, so one can only guess what their final plan will be.

“We have given written commitments to grow our Scottish traffic if APD is removed in its entirety and Ryanair will grow in Scotland if APD is scrapped.

“By how much will be dependent on how competitive Scottish airports are, especially if countries such as Germany and Italy remove their taxes.”

The Conservative election manifesto said there was a “lack of independent evidence that would support the [Scottish] government’s assertions that APD at current levels inhibits personal and business travel”.

A spokesman said it would review APD but the party had other tax priorities, such as keeping down income tax and business rates.

He said any negotiations with the SNP would happen closer to the Scottish budget.

The spokesman also pointed out that Scottish airports were handling record numbers of passengers and APD did not appear to be putting people off travelling.

Annual passenger numbers at Edinburgh Airport grew by nearly 11 per cent to a record 11.5 million in the year to April.

Glasgow’s grew by 12 per cent to a new high of nearly 9 million.

Patrick Harvie of the Greens has said he is convinced an alternative APD policy could be developed, with which he would seek Scottish Government agreement.

He said one option was a frequent-fly levy which reduced aviation emissions but did not penalise those only flying on an annual holiday.

Labour has said cutting APD “won’t make Scotland fairer or greener and is the wrong priority at the wrong time”.

The Liberal Democrats said the plans were “inconsistent with Scotland’s climate commitments”.

The Stop Climate Chaos coalition has said they would increase greenhouse gases by 60,000 tonnes a year.

A BA spokesman said: “We haven’t given a commitment to increase capacity to Scotland if APD is reduced and believe this stealth tax should be axed across the UK.”

A spokesman for Thomson Airways said: “We support a reduction in APD in Scotland and will be responding positively to the [Scottish] government’s consultation on its revision. We continue to review what effect this would have on our capacity.”

The Scottish Government said in its consultation: “Decisions have yet to be taken on how the 50 per cent reduction will be delivered – including how the reduction may be distributed across tax rates and bands.”

“We will also abolish the tax completely when resources allow.”

A spokeswoman for the Scottish Government said: “We have made it clear that we have an ambition to deliver this policy and we will work across the Parliament to do so.

“UK APD continues to act as a barrier to Scotland’s ability to secure new direct international routes and maintain existing ones – reducing it will help attract more direct flights, improving our global connections, boosting the economy and creating jobs.

“We remain committed to reduce APD by 50 per cent by the end of this Parliament, with the reduction beginning in April 2018, which is the date of devolution agreed by the Scottish and UK Governments in the fiscal framework.”

The Scotsman’s EU Referendum page: Keep up to date with latest news, polls and features.

DOWNLOAD THE SCOTSMAN APP ON ITUNES OR GOOGLE PLAY