Direct flights to United States facing fresh threat
Published 09/09/2011 | 03:40
Fears are growing that Northern Ireland's direct air link to North America may be axed as part of a merger deal involving Continental Airlines, which currently operates the loss-making route.
The Belfast-Newark route was initially threatened because air passenger duty on transatlantic routes is 20 times higher in the UK than the Irish Republic.
A Treasury review is looking at the issue but has reached no conclusion.
Now a merger between Continental and United Airlines is planned, aimed at saving $1bn a year in operating costs and focusing on profitable routes.
Next year they are expected to be flying a single, streamlined operation called United.
Last month Finance Minister Sammy Wilson told the Belfast Telegraph: "Whether we can get decisions from the Treasury to coincide with the decision timetable for Continental is something which I have some concerns about."
His comments followed a series of warnings from Continental bosses that they could not compete with the lower tax rate in Dublin.
When they opened the route in 2005 it was profitable and they hoped to grow the service, but rises in air passenger duty in the UK and corresponding falls in the Republic undermined the business model.
Continental is currently making a loss on the route because it is absorbing the £3.2 million APD levy on flights out of Belfast in order to keep prices competitive with its own flights to Newark from Dublin.
Conor McAuliffe, Continental's managing director of Europe, said a family-of-four flying from Belfast would be subject to £240 in APD, but "if they go on the modern road to Dublin Airport they are paying €12".
APD is an excise duty which is charged on the carriage of passengers from a UK airport.
There are four destination bands based on geographical distance from London.
Each has two rates of duty depending upon the class of travel, so there are eight different rates. Cargo planes and private jets are exempt.