September 18, 2015
The Treasury recently published a paper on options for limiting any impact on UK regional airports of possible cuts to Air Passenger Duty in Scotland. The Scottish Government has indicated its plan to halve and then reduce APD from its airports following devolution of powers over the tax. Airports in the North of England have argued that they could face losses if people were to begin travelling to airports north of the border in order to avoid APD charges (currently £13 on almost 80% of tickets, the HMRC June 2015 APD bulletin indicates).
The paper presented 3 possible options: Devolving the setting of APD rates to local authorities, setting variable APD rates around England, or providing aid to regional airports within England. Each option, however, would come with significant challenges or disadvantages, the paper suggests, including the need under EU law to reduce Government funding to local authorities if APD were fully devolved to them; additional administrative burdens and increased scope for error and fraud if rates of APD were to be varied around the country; and limitations on the legal right to provide Government aid to airports except in exceptional circumstances.
Our response to the paper notes that: