Belfast Telegraph

Wednesday 27 August 2014

Northern Ireland air travellers pay £1m a week in aviation taxes

Northern Ireland's air travellers are shelling out around £1m a week in aviation taxes, it can be revealed.

And amid claims that local travellers and businesses are being discriminated against through the air taxes, Enterprise Minister Arlene Foster has vowed that resolving the Air Passenger Duty issue tops her agenda.

A Treasury-led consultation process is already under way with Stormont pressing for Northern Ireland, as an outlying region of the UK, to be made a special case for exemption.

Devolution of aviation taxes is, therefore, one possible outcome of the consultation.

And Mrs Foster insisted that such a development was essential, not only for keeping the routes we already have, but for tapping into potentially lucrative new markets such as Canada and the United Arab Emirates.

The taxes have seen local airports losing out to those in the Republic, which is about to abolish its already meagre aviation tax altogether.

It has also threatened our one transatlantic route, the Continental service between Belfast International and Newark, which has a £60 per passenger mark-up on its Dublin equivalent.

The Continental route, which is worth £20m to our economy, has been saved for the time being - but only because the US carrier is itself absorbing the cost of the duty.

"The fact is, we're at a competitive disadvantage with the Republic," said Mrs Foster. "Basically they are not charging anything at all, but if you fly from Belfast there is a significant difference.

"It has led to a situation where our only transatlantic carrier is trying to absorb the cost of the APD to keep the service going - but that's ultimately unsustainable so we need to find a solution to it."

The minister added: "The idea behind the consultation is whether the power to set your own APD, a bit like Corporation Tax, should be devolved to the Northern Ireland Assembly. Given our very specific circumstances and our competitive disadvantage with the Republic, we will be saying very strongly that we want it devolved."

The feeling at Stormont is that Northern Ireland should be granted special case status similar to the outlaying Scottish islands, which are exempt from the aviation levy.

That, in turn, would give the province the chance to become more competitive in global markets, courtesy of strong, sustainable air links such as the Continental one, which facilitates 100,000 two-way passengers every year. Within the same time frame, however, some 200,000 Northern Ireland-based travellers cross the border to take advantage of Dublin's myriad of long-haul, virtually tax-free air services.

The Enterprise Minister accepts that, in order to help reverse the trend, money will have to be siphoned away from Northern Ireland's block grant.

It is estimated that APD returns from Northern Ireland's air travellers in 2009/10 boosted the Treasury's coffers by £45-55m (between £865,000 and £1.05m per week), and Whitehall would surely expect to shave that off the province's budget should Stormont be dictate its own aviation taxes.

The Executive could, however, recoup monies from their own, albeit lowered APD receipts, not to mention the overall boost to the local economy both the existing long-haul route and potential new ones.

Mrs Foster said she hoped the matter would be resolved by next year, with DUP party colleague and Finance Minister Sammy Wilson's support.

"It would be an issue for the Finance Minister because it's a fiscal issue - so I would presume he'd have to bring forward primary legislation in relation to it."

She added: "We want to make sure we retain the Continental flight, and that we can expand and have further flights."

Chicago, Boston and Dubai have also been earmarked as potential new routes by Belfast International Airport chiefs once APD has been resolved.

The Treasury consultation on APD is set to close next week on June 17.

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