Scotland’s Airports call for Devolution of Air Passenger Duty

Scotland’s largest airports made a joint submission yesterday (28th October 2014) to the Smith Commission calling for Air Passenger Duty (APD) to be devolved to the Scottish Parliament.

Glasgow Airport, Aberdeen International Airport, and Edinburgh Airport put together a case for the Scottish Government to take control of Scotland’s APD for the reduction and eventual abolishment of the passenger tax.

APD is the highest passenger tax in the world, and raised £2.9 billion for the UK treasury for the period 2013-14.

However, according to the report released by the airports, APD costs Scotland two million passengers per annum and £200 million pounds. A 2012 report commissioned by the airports warned that by 2016, APD would cost Scotland up to £210 million in lost tourism spend per year.

The airport group argues that the abolishment of APD in Scotland would pay for itself- with the increase in tourism, and tourism spend creating the funding lost from the abolishment of the APD tax.

The UK is just one of five countries in Europe to levy a passenger departure tax, and it is reportedly damaging areas of the economy. For example, the Republic of Ireland’s equivalent of APD was a mere €3 per passenger in 2012. The APD in the UK in 2012 was anywhere between £13-£92, dependant on the length of flight, and this contributed to passengers travelling from Northern Ireland to Dublin Airport to travel.

More than half a million residents in Northern Ireland used Dublin Airport in 2012, and this figure is growing now that the tax in the Republic of Ireland has been entirely abolished. Although Dublin Airport boasts more routes, the APD in Britain has also risen, costing passengers up to £194 for long-haul flights.

Amanda McMillan, managing director of Glasgow Airport said: If Scotland is to attract and sustain the routes that will enable it to compete effectively in the global marketplace, then it is imperative that the issue of APD is addressed.”

If APD is abolished in Scotland, it could however have an effect on English Airports such as Newcastle Airport which is just over an hour away from the Scottish border. The Emirates Dubai – Newcastle route alone raised a total of £8.5 million for APD in 2012, and the devolution of APD in Scotland could attract routes away from English and Welsh airports to Scottish airports as a cheaper alternative.

Gordon Dewar, Chief Executive of Edinburgh Airport said that Scotland’s airports unanimously agree that air passenger duty is damaging to their industry.

“Ryanair has already committed to delivering over one million new passengers in the event of APD being abolished so it’s obvious that airlines support our argument. They’re already indicating the size of the prize that’s just beyond our grasp,” he said.

Aberdeen Managing Director, Carol Benzie said there is already a near-political agreement across a number of parties, as well as support from the public and from businesses.

“The calls to completely reform this tax regime have been growing steadily louder over the years and are now almost unanimous north of the border,” she said.

Data provided by OAG

Our data above demonstrates the scheduled annual departure capacity from Scotland's three largest airports between 2004-2014. It indicates that all three airports faced a slight decline between 2008-2010, although all have sufficiently welcomed more passengers since 2004.

A press release issued by British Airways revealed that the APD tax is 20 years old this week, and is the fastest growing tax in the UK.

The annual revenue from APD is nearly ten times as much as in the tax's first full year, and in total, air passengers in the UK have paid more than £26 billion in APD since 1994. 

According to City analysts PwC, abolition of APD would boost Britain's economic growth by 0.5 per cent within a year and lead to the creation of 60,000 new jobs without reducing the Treasury's net revenues.

Willie Walsh, chief executive of British Airways’ parent company IAG, said: "Twenty years on, APD has snowballed out of control and become a tax that works against people wanting to visit relatives and friends, go on holiday or grow their business to create jobs. "