Scotland Determined to Axe its Tax

Richard Maslen May 19, 2011

Scotland remains determined to have Air Passenger Duty (APD) devolved, the country’s Head of Aviation, Kenneth Crawford told The HUB’s Lucy Siebert on the day that easyJet launched its high profile campaign against the aviation tax. “Our priority is having APD devolved. We listen to the airlines and they are saying that this tax makes them less competitive than the rest of Europe,” said Crawford. “Our response to the Treasury during the two-month consultation period is that this impacts on our airlines and we want it devolved.”

Under the current government proposals APD will be raised to £13 per short-haul sector next year. According to research by Frontier Economics, commissioned by easyJet, a proposed increase in APD next year could result in 230,000 fewer passenger trips in Scotland. At Edinburgh alone, 109,000 passenger trips could be lost.

Ryanair will be watching the moves in Scotland, with the airline’s Director of New Route Development, Ken O’Toole, stating last week at the Routes Europe event that the removal of APD in the country could potentially impact on the airline’s future planning there. “We are watching for positive changes in the tax regime in that part of the UK,” O’Toole said in an Airline Briefing.

APD is back on the agenda after easyJet’s CEO, Carolyn McCall stated on May 18 that a rise in 2012 would slash three million off UK passenger numbers and would hit the inbound tourism industry to the tune of £475 million. Speaking at the launch of the low-cost carrier’s campaign McCall said: “APD is not a fair tax for airlines or passengers and it makes us uncompetitive in Europe against countries that have no aviation taxes.”

McCall said she supports the Emission Trading Scheme (ETS), which will be introduced next year, but warned that having both taxes together would be a “double whammy” for air travel in the UK. According to research commissioned by Frontier Economics, the South East of England stands to lose over 1.5 million passenger trips. It shows that Stansted could lose 597,000 passenger trips (-3.2%), Gatwick 562,000 (-1.8%) and Luton 249,000 (-2.9%). McCall added that easyJet would be hosting a Parliamentary Reception in London in order to lobby MPs from the coalition government on the issue.

During Ryanair’s Airline Briefing at Routes Europe last week, O’Toole highlighted the damaging impact that aviation taxes have on country’s connectivity with the example of Germany. That country’s €8 aviation tax has resulted in Ryanair reducing its presence in the country by 15 per cent since last summer and removing three aircraft out of the market.

Ireland’s new government already acted earlier in May to reduce its aviation tax from €8 to €3 in an effort to reintroduce routes and capacity that have been lost over the past two years. As a result of the government’s action, the Dublin Airport Authority (DAA) has introduced a new incentive scheme aimed at regaining passenger traffic, and attracting new routes, at Dublin, Cork and Shannon airports between now and 2013.