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Scotland loses £200 million in tourism due to APD

Plane Landing at SunsetThree Scottish airports have warned the government that Air Passenger Duty (APD) is costing the country hundreds of millions in lost revenue from tourism. The airports say this because the tax deters people from visiting the country, and something needs to be done about it.

Edinburgh Airport, Glasgow Airport and Aberdeen Airport bosses teamed up to write to Chancellor George Osborne. This followed a report highlighting the damage APD is having on the economy and the government’s unwillingness to devolve it to Holyrood or reform it. The report found that the levy is deterring two million passengers a year from Scottish airports, and it will cost the country £210 million per year in lost tourism spending by 2016. The airports noted that APD levels have increase in the past five years, and tax on short-haul flights has jumped 160% and on long-haul flights by 225%.

The report also points out that Ireland and Spain have cut back the rate of their aviation tax, while the Netherlands has done away with the levy altogether. Other countries have also recognised that the funds raised from the tax aren’t worth the damage that it does to tourism. Osborne has been warned that the UK is out of step with other European governments’ support of airlines and airports.

Glasgow Airport managing director Amanda McMillan says that they have repeatedly made presentations to the UK government regarding APD with the wider aviation industry. As this report confirms, the tax will continue damaging aviation in Scotland by making routes unreasonable and devastating the country’s links to the rest of the world.

Because of the size of Scotland’s market, McMillan added, they always find it hard to secure and sustain new routes. This situation is compounded more by APD, which artificially depresses demand and deters airlines from basing planes at the airport. Unless there’s a reform of APD, people who have to fly in and out of Scotland will continue facing some of the highest aviation taxes in Europe, which is clearly discouraging for travel.

Gordon Dewar, the chief executive of Edinburgh Airport, says that the impact of APD goes beyond the boundaries of airports across the world. Airlines are telling them that they are seeing it impact the flow of passengers, which is having an impact on where they decide to base aircraft.

Derek Provan, the managing director of Aberdeen Airport, said that the report shows that the tax is damaging to Scotland – to its economy, tourism and ability to recover from the recession. It’s vital that the UK government conduct a detailed and comprehensive review of the duty with urgency, as well as that APD is at least frozen during the review.

Transport Minister Keith Brown supported the call, saying Scotland should have power of the tax. The government has been clear that devolving APD should happen as quickly as possible. The Calman Commission recommended this in 2009, and it’s very frustrating the UK government still hasn’t seen fit to act on the recommendation – despite a recent decision to devolve the issue to Northern Ireland.

Brown added that the UK government clearly recognised that a one-size fits all policy doesn’t work when it devolved APD to Northern Ireland. It doesn’t reflect the fundamental differences in the UK aviation sector, the needs of passengers and the connectivity challenges that regional airports face. APD is one of the highest aviation duties in Europe, and it’s making airports in Scotland uncompetitive for new direct flights. They are in talks with many international carriers in an attempt to help attract new, direct services at Scottish airports. However, APD is acting as a disincentive as it currently stands.

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