Scotland business

Scottish airports call for review of air passenger duty

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Media captionScotland's main airports calling for passenger tax to devolved to Holyrood

Scotland's three largest airports have called on the chancellor to conduct an urgent review of air passenger duty.

It follows a report commissioned by Aberdeen, Glasgow and Edinburgh airports which claimed the tax could cost Scotland more than two million passengers a year by 2016.

It also warned the move could cost the Scottish economy £210m a year in lost tourism spend.

The UK Treasury pointed out overall air passenger numbers were up on last year.

It also said air passenger duty (APD) was frozen last year, and that an 8% increase which came into effect in April meant most passengers paid only a pound extra.

In a joint statement, the three Scottish airports urged Chancellor George Osborne to review the levy, arguing it should be frozen while that takes place.

Their report, which was conducted by aviation industry analysts York Aviation, said APD for short-haul passengers had increased by about 160% since 2007.

Travellers 'penalised'

It also claimed long-haul travellers had been "penalised" with increases of between 225% and 360%.

The study said other European countries had "considerably lower" charges, leaving the UK "out of step with much of the rest of Europe".

The report stated: "In terms of the knock-on impacts to the Scottish economy, APD will over the long-term reduce traffic and connectivity from Scotland's airports, impacting on inward investment, trade and competitiveness.

"It also impacts on Scotland's inbound tourism industry.

"By 2016 we estimate that £210m per annum less will be being spent in Scotland by inbound visitors than if APD had not risen as it has since 2007."

Aberdeen Airport managing director Derek Provan 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 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."

'Tipping point'

Gordon Dewar, chief executive of Edinburgh Airport, said APD had reached a "tipping point where the damage that it is doing to Scotland far outweighs the benefits".

Glasgow Airport managing director Amanda McMillan argued APD would "continue to damage Scottish aviation by making routes unviable and decimating Scotland's links to the rest of the world".

SNP MSP Colin Keir, convener of the Cross Party Group on Aviation in the Scottish Parliament, said the report was "a damning indictment" of current UK government policy on aviation.

"While other countries have scrapped or have significantly reduced levels of APD, travellers to and from Scotland are heavily penalised," he said.

"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."

Duty 'frozen'

Responding to the airports' call, a Treasury spokesman said: "Overall passenger numbers at the three main Scottish airports, and across the UK, are up on last year.

"The government took action by freezing air passenger duty in 2011. Even after the 2012 rise, most passengers will only pay an extra pound in APD.

"Scottish airports particularly benefit from the fact that domestic flights are not subject to VAT and that APD is not paid on flights from the Highlands and Islands."

He added: "It should also be noted that airlines pay no duty on aviation fuel."

The 8% rise in APD this year was announced by the UK government in its Autumn Statement in 2011.

For short-haul flights, the tax increased from £12 to £13. For long-haul flights of more than 4,000 miles, it went up from £85 to £92.

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