Abolishing £13 Air Passenger Duty on the majority of flights out of Northern Ireland would prove too costly to the Northern Ireland Executive, according to an economic report.
Removing APD would mean a reduction of at least £55 million in Northern Ireland’s block grant from Westminster.
This would cover the loss to the Treasury of revenue it collects from APD on flights locally.
“A strong case for change has not been made,” the report’s authors state.
Northern Ireland has already scrapped APD on long-haul flights – a move which saved a service to New York and has cost more than £2 million.
The report by the Northern Ireland Centre for Economic Policy said the benefits of abolishing APD on all other flights would not cover the figure lost to the block grant.
The loss is “a very significant impact on the economic cost-benefit outcome,” the 67-page report said.
Ireland scrapped its air tax last year which has helped Dublin airport attract new routes.
Scotland is also likely to get power over APD as part of devolution plans.
Northern Ireland is looking into financial help for airlines to operate new routes to destinations such as Canada, Turkey and Germany. Aid would cover 50% of landing charges
Belfast international airport managing director Graham Keddie told the BBC: “We know there are airlines with available aircraft who will move swiftly to grow our network of direct air services, offering highly attractive fares to encourage international visitors to experience Northern Ireland.
“However, the continued application of APD is the most visible deterrent to securing their commitment and, while APD in Northern Ireland persists, they will choose more lucrative opportunities elsewhere.”
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