Scotland’s largest airports have demanded the UK Government takes immediate action on air passenger duty (APD) following the publication of a report warning it could cost Scotland more than two million passengers per year by 2016.
The managing directors of Aberdeen, Edinburgh and Glasgow airports have come together to once again urge Chancellor George Osborne to conduct a full and thorough review of APD and recognise the damaging impact it is having on Scotland’s economy and connectivity.
The report, commissioned by the three airports, was unveiled at the inaugural meeting of the Scottish Parliament’s Cross Party Group on Aviation which was held on Wednesday 31 October 2012. In addition to costing Scotland over two million passengers per annum, the report warns that by 2016 APD will cost the Scottish economy up to £210 million in lost tourism spend per annum.
The UK Government has significantly increased rates and restructured APD since 2007. Rates for short haul travel have increased by around 160% with long haul rates increasing by between 225% and 360%. This has been done at a time, latterly, when Scotland and the rest of the UK have been experiencing one of the worst recessions in living memory.
The report also confirms that the UK is out of step with its European counterparts when it comes to aviation tax, with many Governments reducing (Spain, Ireland) or abolishing (Netherlands) APD in order to support their indigenous airlines. There also seems to be a recognition within a number of countries that have tried an aviation duty in recent years that the damage to the industry and its ability to generate prosperity and drive wider economic growth is not worth the tax revenue raised.
Given its location on the periphery of Europe, Scotland and its economy is particularly reliant on aviation and any loss of connectivity will have a significant impact on the country’s competitiveness.
Derek Provan, managing director of Aberdeen Airport, said: "This report shows, quite simply, that APD is damaging Scotland. It is damaging our economy, our tourism potential and our ability as a nation to bounce back from the recession. It limits our opportunities for growth in the employment market, costing as much as £50 million in the process.
"At Aberdeen Airport we run a real risk of losing around 200,000 passengers by 2016 through this damaging tax. Each recent increase in APD has had a dramatic impact upon what we, as airports, have achieved and could have achieved without APD. It is imperative that the UK government undertake a detailed and comprehensive review into APD with the utmost urgency, and at the very least freeze APD whilst that is taking place."
Gordon Dewar, Chief Executive of Edinburgh Airport said: "This tax has now hit its tipping point where the damage that it is doing to Scotland far outwieghs the benefits. This cannot stand and must be reviewed as a matter of urgency.
"The impact of this tax goes far beyond the boundaries of the airport, not just in Scotland, but across the world. Airlines are telling us that they are seeing it have an impact on passenger flows which is ultimately having an impact on their decision making on where to put planes.
"This report lays bare the argument that this tax is assisting with the deficit. Rather, APD is hindering our ability to tackle the economic challenges Scotland faces.!
Amanda McMillan, managing director of Glasgow Airport, said: "Together with the wider aviation industry, we have made repeated representations to the UK Government on APD which, as this report confirms, will continue to damage Scottish aviation by making routes unviable and decimating Scotland’s links to the rest of the world.
"Due to the size of the market in Scotland, we will always find it difficult to attain and sustain new routes and this situation is compounded even further by APD which simply serves to artificially depress demand and dissuade airlines from basing aircraft here.
"Unless APD is reformed, people travelling to and from Scotland - who must fly due to the lack of feasible alternatives - will continue to face some of the highest levels of taxation in Europe which is clearly a disincentive to travel."
Colin Keir MSP, Convenor of the Cross Party Group on Aviation, said: "This report shows why Air Passenger Duty must be devolved to the Scottish Parliament. It’s a damning indictment of the current Westminster government policy on aviation.
"While other countries have scrapped or have significantly reduced levels of APD, travellers to and from Scotland are heavily penalised. APD hits tourism and business and we need to have the power at Holyrood to maintain competitiveness with other countries and fairness to those travellers who have to use our airports."