Northern Ireland

Case not strong enough for abolishing £13 air passenger duty

Media playback is unsupported on your device
Media captionNorthern Ireland has already scrapped APD on long-haul flights - a move which saved the New York service and has cost more than £2m so far

There is not a strong enough case for abolishing a £13 tax on the majority of flights out of Northern Ireland, an economic report for Stormont has said.

Removing air passenger duty (APD) is seen by airports and airlines as key to attracting new routes and tourists.

But the report, prepared for the Northern Ireland Executive, considers the move too costly.

It said removing APD would mean a reduction of at least £55m in Northern Ireland's block grant from Westminster.

This would cover the loss to the Treasury of revenue it collects from APD on flights locally.

"A strong case for change has not been made," the report's authors state.

Northern Ireland has already scrapped APD on long-haul flights - a move which saved the New York service and has cost more than £2m so far.

New routes

The report, carried out by the Northern Ireland Centre for Economic Policy, said the benefits of abolishing APD on all other flights would not cover the figure lost to the block grant.

The loss is "a very significant impact on the economic cost-benefit outcome", the 67-page report states.

Image caption The chief executive of George Best Belfast City Airport, Brian Ambrose, said Northern Ireland is losing out as a result of APD

The Republic of Ireland scrapped its passenger duty in 2014 and it has helped Dublin Airport attract many new routes.

Scotland is also likely to get power over APD.

Instead of a go-it-alone move on APD, the executive is looking into financial help for airlines to operate new routes to the likes of Canada, Turkey and Germany.

Aid would cover 50% of landing charges.

"The Department of Enterprise may wish to consider a more direct targeted intervention," the report concludes.

Northern Ireland's three airports have explored accessing a £20m fund set up by the Chancellor George Osborne to help regional airports throughout the UK.

Should applications be unsuccessful, the executive may look at its own version.

In 2007, a local £4m air route development fund helped to attract nine new routes, including New York.

From this May, the chancellor has announced that APD will not apply to children under 12.

'Potential'

Tourism NI chairman Howard Hastings said: "If you compare with our nearest neighbour in the Republic of Ireland, in the two years since they abolished air passenger duty, they've seen arrivals grow by 1.1 million passengers.

"That's not to say it would happen to that extent for us, but the size of the prize is enormous."

The chief executive of George Best Belfast City Airport, Brian Ambrose, said he welcomed the report as "the first step in a process to address a serious issue".

"Ignoring the realities of the current situation simply isn't an option - Northern Ireland is losing out," Mr Ambrose said.

"I believe there is potential in both a 50% reduction in APD and an air route development fund and will be working with the executive to explore these options further."

Image copyright Aaron McCracken/Harrisons
Image caption Belfast International Airport Managing Director Graham Keddie said the continued application of APD is a visible deterrent to securing the commitment of airlines who would encourage more visitors to Northern Ireland

Belfast International Airport Managing Director Graham Keddie said he was disappointed following the release of the report.

"We know there are airlines with available aircraft who will move swiftly to grow our network of direct air services, offering highly attractive fares to encourage international visitors to experience Northern Ireland," he said.

"However the continued application of APD is the most visible deterrent to securing their commitment and, while APD in Northern Ireland persists, they will choose more lucrative opportunities elsewhere."

More on this story

Related Internet links

The BBC is not responsible for the content of external Internet sites