Chancellor urged to give Scottish airports fighting chance against European rivals
15 March 2012
Scotland’s main airports have urged Chancellor George Osborne to rethink a planned hike in Air Passenger Duty (APD) “to give our airlines and airports a fighting chance” to compete against European rivals.
The managing directors of Aberdeen, Edinburgh and Glasgow airports – which collectively handle more than 19 million passengers – have warned that Scotland and the UK are losing out to Europe because of spiraling APD levels, now the highest in the world.
The warning comes ahead of a planned 10% increase in APD in this month’s Budget.
In a joint letter to the Chancellor, MDs Derek Provan (Aberdeen), Jim O’Sullivan (Edinburgh) and Amanda McMillan (Glasgow) write:
“APD levels in the UK are the highest in the world, and rising. With the industry in Britain bracing itself for further rises to this already disproportionate tax, our competitors in Europe – where many Governments have reduced or removed passenger duty entirely – continue to enjoy a competitive edge over UK airports.
“In Scotland, we have particular concerns about our future ability to attract new airlines in what is an intensely competitive global market. There is a risk that airlines looking to serve new markets will choose other European countries at the expense of Scotland. This in turn will have a significant impact on employment, business competitiveness and inbound tourism.”
The letter cites a report commissioned by BAA in 2011 which warned that further increases in APD could cost Scotland’s airports around 1.2 million passengers over three years, with a corresponding financial cost of £77 million in lost tourism revenue.
The MDs highlight their hard won success in growing Scotland’s international route network, including the recent news that Emirates is to operate double daily flights from Glasgow to Dubai, the launch of a new flagship service from Aberdeen to Frankfurt, and the continued expansion of Edinburgh’s European route network.
However, they warn that in discussions with airlines “APD is regularly cited as a barrier to growth and several airlines have made it clear to us that APD levels are simply too high to enable route development from Scotland to be commercially viable.”
They warn too that a shrinking international network will damage exports and do little to promote trade and commerce between Scotland and the rest of the world.
They also highlight the fact that UK airlines are now part of the EU Emissions Trading Scheme, which came into effect in January.
“The planned increase in APD has the effect of taxing UK air passengers twice,” they write. “With the emissions trading now an established reality, and the airline industry committed to further steps to reduce its environmental impact, there can be no justification for any further increase in APD. Aviation should not be taxed twice.”
The letter also welcomes the UK Government’s decision to reduce APD levels in Northern Ireland, describing the move as “recognition that APD presents a significant barrier to growth and a positive indication that the Government is prepared to support the industry.”
However, they warn the decision does not go far enough and again pressed the Chancellor to rethink the Government’s policy on APD “to give our airlines and airports a fighting chance to compete effectively with their European counterparts.”