Scotland's largest airports have joined together to demand that the UK Government devolves its Air Passenger Duty (APD) to the Scottish Government as part of the Scotland Bill.
In replying to the UK Government's consultation on its proposals on the future of APD, Aberdeen, Edinburgh and Glasgow Airports have all called for devolution of the tax.
The Calman Commission recommended the devolution of APD as part of the Scotland Bill and the Scottish Government has supported this. However as the UK Government is consulting on changes to aviation duty as per its Programme for Government it has not been included in the Bill in its current form.
Scotland's airports would support the future devolution of APD to the Scottish Government on the basis of its more progressive approach to aviation The Scottish Government has indicated that revenue raised via APD would be used to support Scottish aviation and tourism and seek to mitigate the very real impact this tax has on Scotland.
A report, commissioned by Aberdeen, Edinburgh and Glasgow airports, published in January 2011, demonstrated that any proposed future increases in tax would harm Scottish aviation and tourism. The report:
- examined the levels of APD (or equivalent) across other EU countries.
- constructed a demand impact model to consider the impact of future tax rises on passenger demand.
- analysed the impact on particular long haul, UK and Scottish routes (typically served by two or more airports).
The report shows that the UK's approach to APD is very much out of step with the rest of Europe, including Ireland, which has recently reduced the burden on aviation in order to encourage inbound tourism to fuel its ailing economy. UK rates are the highest of any major European country. It suggests that over the next three years, Scottish airports will lose around 1.2 million passengers, with the largest numeric losses on domestic services.
APD, as a devolved matter, would need to go some way to reversing the loss of these passengers and recouping the £77 million in lost tourism revenue that the recent rise in APD has cost Scotland.
Derek Provan, Managing Director of Aberdeen Airport, said: "The report warns that a drop in demand of this scale could undermine the long term viability of some routes, and harm the prospects of further route development. This, in turn, will have implications for Scotland's business competitiveness and inbound tourism potential. The measures proposed by the Scottish Government would lessen this impact.”
Kevin Brown, Managing Director, Edinburgh Airport said: "The previous Government sought to identify APD as a environmental tax but rates do not reflect actual carbon emissions and no mechanism has ever been mooted to allow for aviation’s introduction into the EU’s Emissions Trading Scheme from 2012. EU ETS’s effect, therefore, is to tax passengers twice. We are not saying we should not be taxed, only that any taxation is fair and proportionate.”
Amanda McMillan, Managing Director, Glasgow Airport said: "If the aviation industry is to continue to play an active role in generating employment, encouraging export-led growth, supporting tourism and attracting inward investment, then it cannot be subjected to any further increases in APD.
“Due to Scotland’s geographic location on the periphery of Europe we are particularly reliant on air service access, but our ability to attract new routes will be seriously hampered as airlines, when faced with the continued rise in APD, will simply look elsewhere.”