Claims that around a third of Edinburgh to London rail journeys could be lost to air travel if air passenger duty (APD) is abolished are not plausible, the chief executive of Scotland’s busiest airport has told MSPs.
The figure was quoted by Virgin Trains ahead of a Holyrood Finance Committee meeting on the tax.
It was challenged during the hearing by Edinburgh Airport’s chief executive officer Gordon Dewar.
The Scottish Government wants to cut APD by 50%. The reduction will begin when a Scottish replacement to APD is introduced in April 2018, and will be delivered in full by the end of this Parliament.
Ministers hope reducing the levy, and eventually abolishing it, will increase the number of direct flights to and from Scotland.
Virgin Trains operates on the East Coast and West Coast inter-city rail routes between Scotland and London.
It said passenger numbers on its rail services could be significantly impacted by the Government’s APD policy.
Asked if there is robust evidence to support its claims of a one-third reduction, David Horne, managing director of Virgin Trains’ East Coast route, told the committee: “We have evidence that customers do compare the price of the choice of the modes that they have, as well as of course factors like journey time and the connectivity.”
But Mr Dewar said he had “never seen elasticities of anything of that scale in terms of impact”.
He added: “So I don’t recognise where the numbers come from, or how that’s plausible.”
Mr Dewar told MSPs that at the moment, Scotland remains a “complete outlier” on the tax compared with other European countries.
“With the exception of Norway which has only just recently announced an increase in this tax... every other country has gone in the opposite direction,” he said.
“We’ll still be significantly more expensive than just about every other country.
“In fact, we’ll still be the most expensive (in Europe) even if we halved it across the board.”
Tim Alderslade, chief executive of Airlines UK, said: “If Scotland pushes ahead with a 50% reduction, then Scotland would improve for short-haul its standing by 38 places over the rest of the UK.
“For long-haul it would rank the ninth highest in the world, leaving England and Wales at the top of the league table.
“So it would still be one of the most uncompetitive nations in the world, both for short-haul and for long-haul, but it would be getting somewhere up the league tables.”