Airlines have warned that the Government risks making Air Passenger Duty (APD) “massively complex” following publication of plans to devolve the tax to Wales.
The Government outlined proposals for devolving powers to the Welsh Parliament, including control of APD, on Friday – along with plans for a review of options to mitigate the impact of APD devolution.
Regional airports in England demanded “a consistent charging regime” across the UK.
The major political parties have already agreed to devolve control of APD to the Scottish Government following the next election, and the Scottish Parliament has committed to cutting rates by 50%.
The Government has accepted this could damage airports in England and on Friday promised a review of options to support the regional airports affected after the General Election.
This will be published in the summer and consider three options – devolution of APD rates in England, variation of APD in England with rates set according to demand or the level of congestion, and aid for regional airports.
The UK Board of Airline Representatives (BAR UK) warned: “All three options are unlikely to be agreeable by airlines.”
BAR UK chief executive Dale Keller said devolving APD rates in England was “likely to cause a massively complex situation with varying rates of APD across the whole of the UK”.
He said varying rates according to demand would be “result in pressure for a London-only congestion tax”.
And Keller warned the option of providing compensatory aid to regional airports “is likely to be difficult under EU state aid rules”.
Keller told Travel Weekly: “The Government has some time to get this right. It’s sensible for them to announce a review process and discussion paper.”
But he said: “It’s vital that devolved APD is not seen as just a regional airport issue. Airlines collect the tax and it is airline and consumer behaviour that will ultimately impact a specific airport.”
The airports likely to be most affected by the latest devolution proposals, Bristol and Liverpool, issued statements welcoming proposals for varying APD rates or aid payments.
Bristol Airport chief executive Rob Sinclair said: “Without similar measures for regional airports in England, devolution of APD to Wales would simply result in the redistribution of passengers from Bristol and other English airports to Cardiff, severely distorting the market.”
Andrew Cornish, chief executive of Liverpool Airport, said: “Liverpool is the closest airport for thousands of passengers from North Wales.
“Should plans to lower or abolish APD for airports in Wales go ahead, this is likely to have an impact on our business.
“We would hope sense will prevail and that the Government would ensure a consistent charging regime across all parts of the UK so as not to put airports such as Liverpool at a disadvantage.”
Airport Operators Association chief executive Darren Caplan said: “Given all the indications are that the Scottish Government will proceed with its promise to reduce APD by 50%, the Treasury will need to set out how airports across the whole of the country are not adversely impacted.
“A cut anywhere must be matched by a reduction everywhere so that we can ensure the most competitive aviation market in the world is not undermined by distortive levels of taxation.”
Caplan added: “Given the timescales involved, we urge the Government to take a decision on how this will be averted as soon as possible.”