MPs report argues against scrapping passenger duty

Edinburgh Airport. Picture: Ian Georgeson
Edinburgh Airport. Picture: Ian Georgeson
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AIRPORTS in the north east of England would be disadvantaged if Air Passenger Duty (APD) is dropped in Scotland, a report by MPs has said.

The report warned that if APD is scrapped in Scotland - which is a possibility due to the tax being devolved to Holyrood - “airports in England would be subject to a similar competitive disadvantage to that currently experienced in Northern Ireland”.

On domestic flights where APD is charged at both ends of the trip, the tax “incentivises airlines and passengers to fly from airports located in other EU member states”, said the report from the House of Commons Transport Committee.

The MPs said that Northern Ireland was suffering in terms of jobs, growth and connectivity as aviation taxes were higher than in the Republic of Ireland.

Plans to exempt children from APD, announced in the autumn statement of 2014, was “a marginal change which did nothing for business travellers and little for smaller airports”, the report added.

The committee said: “We found that APD is the principal threat to the smaller airports sector.

“APD cannot be amended to support people, businesses and regional economies because of the operation of European competition law, while proposals to devolve it to the regions would serve only to spread a patchwork of market distortions across the UK.”

Launching the report today the committee’s chairwoman Louise Ellman (Lab: Liverpool Riverside) said: “Smaller airports drive economic growth.

“But the smaller airports sector - which is vital to people and businesses in the regions - is limited by APD. Transport ministers must stand up for smaller airports and make the case to the Treasury that APD squeezes jobs, growth and connectivity.”

She went on: “The whole country should share the economic benefits of expanded airport capacity. But that will only happen if new capacity includes new domestic flights to airports outside London.

“The Department for Transport needs to take a proactive approach and ensure that the regions are connected.”

The report covered around 40 smaller airports ranging in size from Newcastle, which handled 4.4 million passengers in 2013, to Lydd in Kent which handled 1,000.

Airport Operators Association chief executive Darren Caplan said: “The past few years have been tough for many of our smaller members.

“Reducing APD is the single biggest thing that could enable airports to attract new routes and increase their passenger numbers. APD is the highest aviation tax in the world and is increasingly putting the UK at a disadvantage.”

A Department for Transport spokesman said: “Regional airports make a vital contribution to the UK economy by boosting local jobs and providing important domestic and international connectivity. We want to help these airports thrive as part of our long- term economic plan, which is why we launched the Regional Air Connectivity Fund to support more new air routes.

“We are now assessing bids from airports and airlines for this funding and will soon announce a short list of routes, with a final announcement over the summer.

“We welcome the publication of the committee’s report on smaller airports and we will study their conclusions carefully before responding in due course.”


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