Cut in passenger tax ‘would deliver £1bn boost’

HALVING air passenger duty (APD) would create almost 4,000 jobs and boost the Scottish economy by £1 billion over the next five years, a report commissioned by Edinburgh Airport revealed today.
Michael O'Leary said Ryanair would double the amount of passengers travelling in Scotland. Picture: Greg MacveanMichael O'Leary said Ryanair would double the amount of passengers travelling in Scotland. Picture: Greg Macvean
Michael O'Leary said Ryanair would double the amount of passengers travelling in Scotland. Picture: Greg Macvean

The study, compiled by air transport consultant York Aviation, said that increased tourism spending and job creation would more than offset the £110 million that would be lost in tax revenue this year if the levy was slashed.

The Scottish Government has already committed to reducing APD by 50 per cent within the term of the next parliament after the Smith Commission recommended the levy be devolved to Holyrood, but Edinburgh Airport chief executive Gordon Dewar called for “certainty” on the timetable for change.

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Dewar said: “We’ve long argued that APD is a tax on Scotland’s ability to compete with European airports of our size, and our economy is footing the bill in lost jobs and lost opportunities. It’s also damaging the ability for our passengers to travel and to take advantage of the amazing connectivity we have from Edinburgh.

He added: “Our report shows that the economic benefits of a reduction will outweigh any lost tax revenues. It’s therefore reasonable for passengers, airlines and the tourism industry to have some certainty on when this regressive tax will be reduced, and to know whether it will eventually be scrapped.”

Ryanair chief executive Michael O’Leary last year said the Irish budget airline could double the number of passengers it flies in Scotland within two years if the country abolished the “penal” levy.

During a visit to Edinburgh, O’Leary said: “We’re working on a campaign with Edinburgh, Glasgow and Prestwick airports that says if APD is scrapped in Scotland we will double in size over a two-year period. So we would go from 3.5 million to 7 million passengers in two years, with 1.5 million more at Edinburgh, and one million more at Glasgow and Prestwick.”

APD rates start at £13 per passenger on short-haul flights from the UK, but Chancellor George Osborne announced in December’s Autumn Statement that the levy will be abolished for children under 12 from May, and would be scrapped for under-16s from next year. The Treasury said the changes would help cut the cost of holidays for families by up to £71 per child.

Mike Cantlay, chairman of VisitScotland, said: “We are pleased that, as of May, APD will no longer apply to under-12s and that fiscal authority for APD will ultimately be transferred to the Scottish Government, as recommended by the Smith Commission. There is no doubt, however, that APD is acting as a major deterrent to many potential visitors. Few other EU countries levy APD, so this places Scottish tourism at a competitive disadvantage.”

A spokeswoman for the Scottish Government said today’s report “only strengthens” its argument that APD should be devolved to Holyrood.

She added: “In terms of the timetable, only once the necessary legislation has been passed by the UK parliament will the Scottish Government be able to legislate for a replacement Scottish tax.

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“We have confirmed we intend to reduce APD by 50 per cent within the next parliament with a view to eventual abolition of the tax when public finances allow. No specific timetable has been given by the UK government for passing the legislation, but we continue to argue for this to happen as soon as possible.”