Trade backing for Transport Committee concerns over APD

Trade backing for Transport Committee concerns over APD

The trade today voiced support for group of MPs in calling for the government to take a national approach to addressing the impact of Air Passenger Duty.

Smaller UK airports are being held back by the existence of the departure tax, according to a report published by the House of Commons Transport Committee.

“We found that APD is the principal threat to the smaller airports sector,” the report says.

“APD cannot be amended to support people, businesses and regional economies because of the operation of European competition law, while proposals to devolve it to the regions would serve only to spread a patchwork of market distortions across the UK.”

The double charging of APD on domestic return flights "incentivises passengers to fly from hub airports in other European countries member states," the committee warns.

It points out that the proposed devolution of APD to Scotland could place airports in northern England at a “serious disadvantage”.

Committee chairman, Labour MP Louise Ellman (pictured), said: "We heard about how airports in Northern Ireland have been affected by APD, where passengers choose to fly from Dublin because aviation taxes are lower. Northern England could experience a similar competitive disadvantage if APD is devolved to Scotland."

She added: "Smaller airports drive economic growth. But the smaller airports sector - which is vital to people and businesses in the regions - is limited by APD.

“Transport ministers must stand up for smaller airports and make the case to the Treasury that APD squeezes jobs, growth and connectivity."

The report also examines how smaller airports might benefit from airport expansion in the south-east.

Ellman said: "The whole country should share the economic benefits of expanded airport capacity.

“But that will only happen if new capacity includes new domestic flights to airports outside London. The Department for Transport needs to take a proactive approach and ensure that the regions are connected."

The report explores how the government can support regional connectivity and calls on the DfT to assess whether some new slots could be ring-fenced to support regional connectivity.

It covers around 40 smaller airports ranging in size from Newcastle, which handled 4.4 million passengers in 2013, to Lydd in Kent which handled 1,000.

Abta responded to the findings by saying the report supports its concerns that any reduction in APD in Scotland could negatively impact airports in the rest of the UK.

“Any reduction in APD must be matched across the whole of the UK,” Abta said. “The report also highlights the damaging effect of double-charging of APD on domestic return flights.

“We welcome the report’s recommendation that the government take a strategic and national approach to addressing APD.”

Airport Operators Association chief executive Darren Caplan said:  “The past few years have been tough for many of our smaller members, with airports such as Plymouth, Blackpool and Manston either closing or no longer offering commercial operations.

“Passenger numbers are now on the whole going in the right direction and airports are busy announcing ambitious investment programmes in their terminals and facilities.

“However, as the committee rightly concludes, there are things that the government can and should be doing to make it easier for them to expand their businesses.

“Reducing APD is the single biggest thing that could enable airports to attract new routes and increase their passenger numbers.

“We were pleased that the Treasury announced the abolition of APD on children in the 2014 Autumn Statement, as well as the removal of the longest-haul bands C & D in the 2014 Budget, but the fact remains that APD is the highest aviation tax in the world and is increasingly putting the UK at a disadvantage compared to our nearest international rivals. It also disproportionately impacts smaller airports.

“We continue to believe that the eventual devolution of APD to Scotland, when it happens next year, offers a real opportunity to see a sizeable reduction in the tax across the whole of the UK.

“We welcome the announcement that the Treasury will soon publish a review and discussion paper on APD and will be making the case that no airport should be disadvantaged by devolution.

“We therefore welcome the committee’s conclusion that the government’s response should be to act strategically and in the national interest. We will also continue to advocate for a proportionate policy and regulatory regime which takes account of the nature of smaller airport operations.”


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