Airport bosses demand review of APD

Nov 1 2012

Scotland's three largest airports have demanded the UK Government review the "damaging" air passenger duty, as a new report claimed the charge could lead to a drop in passengers and a fall in tourist spending.

Bosses at Aberdeen, Glasgow and Edinburgh airports have joined forces to urge Chancellor George Osborne to take immediate action on the levy. As well as wanting the charge to be reviewed, they said it should be frozen while any review takes place.

The report on the impact of air passenger duty (APD) warned that it could cost the Scottish economy £210 million a year in lost tourism spending by 2016 and could lead to 2.1 million fewer passengers in Scotland's airports by then.

Commissioned by the three airports, the report said that since 2007 the APD charge for short-haul passengers has increased by about 160%, while long-haul travellers have been "penalised" with increases of between 225% and 360%. Other European countries have similar charges but these are "considerably lower", leaving the UK "out of step with much of the rest of Europe on this issue".

The report states: "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 £210 million per annum less will be being spent in Scotland by inbound visitors than if APD had not risen as it has since 2007."

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 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 APD has reached a "tipping point where the damage that it is doing to Scotland far outweighs the benefits".

He said: "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."

Mr Dewar's view is supported by Glasgow Airport managing director Amanda McMillan, who argued that APD "will continue to damage Scottish aviation by making routes unviable and decimating Scotland's links to the rest of the world".

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