Chancellor George Osborne is being lobbied ahead of next month’s Autumn Statement to ensure fairness in Air Passenger Duty levels across the UK following Scottish devolution.
The two organisations representing the majority of airlines operating to and from the UK have joined forces to highlight the opportunity that the devolution of APD to Scotland presents to make the rest of the UK competitive.
The Scottish Parliament has pledged to cut APD by 50% before eventually abolishing the tax altogether, while regions in England have indicated they also want powers to set APD as part of the government’s regional devolution plans.
The joint letter to the chancellor from the British Air Transport Association (Bata) and the Board of Airline Representatives in the UK (Bar UK) follows official statistics published last week showing that the air tax has already cost passengers using UK airports more than £2.3 billion in the first nine months of 2015.
Bata and Bar UK both raised concerns over the summer about proposals to deal with the impact of devolution of APD to Scotland. Both organisations highlighted significant flaws with the three potential policy options set out in a Treasury discussion paper on the issue.
The two trade associations say a 50% reduction in Band A and Band B rates of UK APD would be the best way to ensure broad parity with Scotland in the short term.
This would support regional growth, while not artificially distorting competition or damaging aviation’s contribution to the national economy.
Their objective remains abolition of APD before the end of this Parliament, to deliver the greatest economic benefits and transform the UK’s competitiveness.
Bata chief executive, Nathan Stower, said: “The chancellor is right to recognise that devolution including the Scottish government’s plans to halve APD will have implications for England, but we cannot support the devolution of APD within England.
“We are particularly concerned that a group of airports are proposing that there should be a higher rate of APD at so-called ‘congested airports’.
“We believe there is a compelling economic and political case for abolition of APD during this Parliament to improve the UK’s international competitiveness, boost trade, increase productivity, encourage inbound tourism and support the travelling public.”
Commenting on the recent Treasury Discussion Paper about responding to the impact of devolution of APD,
Bar UK chief executive, Dale Keller, added: “We believe passengers would find it hard to understand and difficult to accept having to pay more tax to fly than people living in other parts of the country.
“To put it simply, why should someone living in Bedford, Croydon, or Reading have to pay more tax to visit a potential client, go on holiday, or visit their family and friends, than someone living in Bradford, Chorley or Redcar?
“Devolution presents the chancellor with an opportunity to take the lead in addressing the fundamental lack of competitiveness of UK APD.”