MPs have backed airports in Northern Ireland and called for Air Passenger Duty (APD) to be scrapped due to the detrimental effect it is having on the country’s economy.
Belfast International Airport has welcomed the submissions by the Northern Ireland Affairs Committee for the government to get rid of the APD on flights in and out of Northern Ireland airports.
In a report published today (8 July), the Northern Ireland Affairs Committee recommended that the current tax bands A and B should be merged and a rate of 0% should be applied to them both.
At the moment flights between Great Britain and Northern Ireland are taxed up to £24 per passenger, while flights to the US are taxed at up to £120 per passenger.
The same flights from Dublin – which is located just 100 miles away by car – carry a single tax of €3 per passenger, making it a highly competitive and distorted market.
For this reason, many people are starting to cross the border into the Republic of Ireland to fly abroad, where it is much cheaper.
Distance to capital city from London
APD in UK and Northern Ireland:
ATT in Republic of Ireland
Band A (less than 2000m – e.g flights to UK and Europe)
Band B (2001m - 4000m – e.g flights to US)
Band C (4001m – 6000m –e.g flights to Thailand)
Band D (6001m+ – e.g flights to Australia)
Northern Ireland is geographically isolated from the rest of the UK, meaning that as a region it is particularly dependent on strong air transport links.
Therefore, APD poses a very specific challenge to the country’s economic development and its competitive position with the Republic of Ireland.
According to Laurence Robertson MP, chair of the committee, the particular concern is the daily Continental Airline route from Belfast International to Newark Airport – a vital link between Northern Ireland and North America.
This one direct transatlantic flight carries 100,000 passengers a year to New York and is currently at risk from APD — which adds at least £60 per passenger to the US compared with the €3 rate in the Republic of Ireland.
At the moment the airline has chosen to absorb the tax itself – expecting to pay £3.2 million out of its own income this year – but has added it is not sustainable to continue to do that for the long term. As a result, the airline may be forced to move the route out of Northern Ireland if the tax is not abolished.
John Doran, managing director of Belfast International Airport, said: “In the six years that that service has been operating, a conservative estimate by the inward investment authorities and the tourism authorities suggests that about £20 million of benefit has accrued to the Northern Ireland economy each year.
“So, in and around £100 million of benefit has accrued from that one route alone.”
He added: “If the route were to be ended, or relocated to Dublin, it would be a significant blow to Northern Ireland.”
The report also recognises that the opportunities to expand Northern Ireland’s economy through exports and tourism are being threatened by the continuation of APD.
The report said: “As far as we are concerned, and assuming that APD is not abolished for the whole of the UK, there is only one solution – abolish APD on all flights departing Northern Ireland’s airports and likewise abolish APD on direct flights into Northern Ireland from Great Britain.
“In that way, Northern Ireland’s business, enterprise and tourist industry stands a chance of being able to compete with the Republic of Ireland.”
John Doran added: “ We greatly welcome the committee’s report and it’s encouraging that the committee has concluded that APD is bad news for the Northern Ireland economy. We have been saying this for a while.
“Northern Ireland is unique in that it is geographically isolated from the rest of the UK, meaning that as a region it is particularly dependent on strong air transport links, and as such APD poses a very specific challenge to Northern Ireland’s economic development.”
The government receives some £2.5 billion in revenue from APD, of which the Treasury forecasts some £60 million to be collected from Northern Ireland in 2012/13.
Doran added: “We hope and trust the Treasury will give this issue the consideration it deserves. Northern Ireland is a small recovering economy that relies on its air links for economic wellbeing.”
Elsewhere, Brian Ambrose, CEO of George Best Belfast City Airport, said: “On some services APD can account for 50% of the total cost of a return flight from Belfast to Great Britain.
“I believe Northern Ireland has lost in the region of one million passengers in recent years and every effort should be made to level the playing field and allow us to recoup this number.
“We welcome the findings of this timely and important report and hope that government give it serious consideration.”
A decision on the future of APD in Northern Ireland is expected in the autumn.