Airport can really take off if tax is cut, says MP
Belfast International Airport could double in size within a decade if a controversial air tax is cut, a DUP MP has claimed.
Gregory Campbell made the comments following the publication of a report by the Northern Ireland Affairs Committee that has urged the Government to re-evaluate air passenger duty (APD) after Brexit.
Mr Campbell sits on the House of Commons committee, which has been examining how the tax system affects tourism here, including the levy on flights to and from local airports compared with Dublin’s current tax-free status.
The MP said the study revealed that APD — which costs £13, £26 or £78 depending on flight type — is “a very important tool in the armoury of attracting new airlines to airports”.
“Dublin Airport is probably now on target in the next five years to hit 30m passengers while both Belfast airports between them will hardly hit 10m, and part of that is because of APD,” Mr Campbell said.
“Belfast International will never be the size of Dublin, but if the decision were taken to either radically reduce or do away with APD completely, it could double in size within a 10-year time span.”
Mr Campbell said that with the Executive is up and running “hopefully within weeks”, then a decision on air duty could be taken “within 18 months to two years”, meaning that by 2029 Aldergrove could see 100% growth. “Potentially that is what is achievable; that is not just me making a guesstimate — Dublin proves it can be achieved,” he said.
“Belfast International and Belfast City Airports have reported significant growth figures in the past 18 months, so if you were to take APD out of the equation you could be into double digit growth immediately.”
The committee also advised the Government to consider a reduced VAT rate for Northern Ireland’s tourism industry after Brexit as businesses here face the standard VAT rate of 20%. In the Republic they pay a reduced 9% rate.
Belfast International boss Graham Keddie said APD made it difficult to attract new carriers and routes, and placed airports here at a significant competitive disadvantage to Dublin.
“Removing APD would be an economic game-changer,” he said. “There is a cost involved, but we have argued successfully that the benefits of devolving the tax and then getting rid of it would be offset by the gains.
“We need a level playing pitch with the Republic. We’re losing too many passengers to Dublin Airport, and although we’ve achieved substantial growth, much more is achievable if APD was jettisoned and VAT rates on tourism reduced to competitive levels.”
UUP MP Danny Kinahan said Northern Ireland should follow Scotland’s lead. “The Scottish Government has demonstrated much more ambition on this issue, opting to halve APD by 2018, with a long-term objective of removing it altogether when feasible.”
Colin Neill, CEO of Hospitality Ulster, said a VAT rate reduction was essential because the Republic was Northern Ireland’s second largest market and nearest competitor.
“This also hampers us in our developing markets like Germany, where tourism VAT is just 7%,” he said.
“In fact, out of all the EU countries, only Denmark has a higher tourism VAT rate then the UK, with the majority of EU countries having a rate significantly below 10%.”