Airlines frustrated over stalled plans for new APD in Scotland

Airlines frustrated over stalled plans for new APD in Scotland

Aviation body Airlines UK has voiced “frustration” at a delay in plans to replace Air Passenger Duty in Scotland with a lower rate alternative.

The Scottish government wants to replace APD with a new devolved Air Departure Tax from April next year.

But plans to continue exempting journeys from airports in the Highlands and Islands require EU approval under state aid rules.

It is understood that getting this approval could take longer than Brexit, the BBC reported.

Finance secretary Derek Mackay told MSPs that the “mess” was the UK government’s fault, saying it could cost the Scottish government £320 million to maintain the exemption in the meantime.

However, the Treasury insisted that it was the responsibility of the Scottish government to ensure any new tax was compliant with state aid rules.

And opposition parties voiced suspicion that Mackay was preparing to back down from plans to cut the new tax, something he denied.

The Scottish Parliament was given powers to charge tax on passengers leaving Scottish airports under the Scotland Act, which came into force last year.

MSPs signed off the creation of the new tax in June.

The Scottish government wants to cut the new tax by 50%, before eventually scrapping it completely. It argues the move will boost the economy by increasing the number of flights to and from the country.

However, even before MSPs debate rates, exemptions for the Highlands and Islands are proving an issue for the new tax.

Airlines UK chief executive Tim Alderslade said: “This potential delay is disappointing and frustrating but we’re pleased that the commitment to halving the tax still stands.

“We have been engaging with the Scottish government and civil servants at Westminster about the situation with respect to the state aid exemption for Highlands and Islands Airports Limited airports and believe that a solution can be reached.

“We continue to believe that lower levels of tax on aviation will provide a much needed boost to connectivity and will make Scotland a more attractive place for airlines to add capacity, delivering new routes and more services.

“Following our exit from the European Union this will be more important than ever.”

The doubts were raised as British Airways revealed plans to expand its Inverness-Heathrow service from seven to ten flights a week from March.

The new schedule will see a 30% increase in capacity on the route to the Scottish highlands gateway.

The extra frequencies follow the airline’s agreement with Loganair for an extended code share agreement from last month.

Phyllis Stuart, BA’s manager at Inverness said: “We’re delighted to be able to offer our customers more flights from the highland capital, offering more seats on the route after a successful first 18 months operating the route.

“Our new schedule, which will come into operation at the beginning of the summer 2018 flying programme, will mean that on three days of the week, Wednesdays, Saturdays and Sundays, British Airways will offer customers a double daily service between the capital of the highlands and islands and London.

“We, and our partners at Inverness airport and the business communities in Inverness and the highland region, have worked tirelessly to encourage business and leisure travellers to use the new route for the benefit of the businesses and individuals in the region.

“The increased frequency on the route is the result of that partnership and further demonstrates British Airways’ long-standing commitment to the highlands and islands of Scotland.”

Highlands and Islands Airports Limited managing director Inglis Lyon said: “This announcement is excellent news for the highland community and Inverness Airport.

“We have worked closely with British Airways to further improve connectivity and the new schedule provides additional two-way connectivity with destinatons such as Atlanta, San Diego, Phoenix, Berlin and Mexico City.

“We can also anticipate more than ten per cent additional inbound passengers to the highlands and islands to experience all the north of Scotland has to offer.”

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