Belfast Telegraph

Deal unveiled that could save Northern Ireland's air link to US

Chancellor to reveal if flight tax will be cut

By Claire McNeilly

A formal announcement on the decision to abolish — or greatly reduce — contentious aviation tax in Northern Ireland will be revealed today.

The move comes after Chancellor George Osborne personally intervened to address air passenger duty (APD) and save our only transatlantic route.

In February, the Belfast Telegraph warned that the future of the Belfast to New York (Newark) route, operated by Continental Airlines, was in danger because of APD.

The daily service, which is worth around £20m a year to the local economy, was hanging in the balance after the Treasury imposed a tax hike last November.

The exorbitant levy adds £60 to an economy fare and £120 to a business ticket for US-bound passengers, whereas the charge from Dublin is just €3 (£2.60).

Continental Airlines flies from both airports and bosses said the company had been subsidising the tax cost in Belfast in order to avoid passengers simply opting for Dublin.

However, the airline recently told MPs that this would cost them £3.2m this year, making the route no longer viable.

It is understood that Continental was about to call time on the route from January next year unless a decision was made swiftly.

Last week, 21 local companies took the unusual step of writing to the Chancellor to outline their fears in the event of inaction over APD.

Flagship company Bombardier Aerospace Belfast and leading bus manufacturer Wrightbus were among the 23 signatories.

They insisted that the withdrawal of the transatlantic service would sound the death knell for Northern Ireland’s chances of economic recovery.

Alliance regional development spokesman Stewart Dickson said it was vital that the Belfast-New York flight is retained.

“This air route is extremely important to attracting investment and to our tourism industry and I call on the Chancellor George Osborne to take action regarding APD to ensure the route can be safeguarded,” the MLA said.

Mr Osborne is due to formally outline his plans for the contentious levy today, after being urged on by Secretary of State Owen Paterson and Executive ministers.

The Executive has been requesting that Northern Ireland be made a special case, like outlaying Scottish islands, which are exempt from the aviation levy. It believes the province qualifies for special treatment because it borders another country that can undercut it tax-wise.

Northern Ireland's exemption is expected to be more limited than the Scottish islands and will not apply to short-haul flights.

Saving the route brings substantial relief to the Executive and the business community.

Firms like the New York Stock Exchange have cited the link as vital in deciding to invest here.

Background

A deal on air passenger duty (APD) that would exempt Northern Ireland’s only direct air link to the USA is expected today.

George Osborne is due to make the announcement after he personally intervened to try and save the daily service. In February the Belfast Telegraph revealed that the punitive cost of the tax was threatening the route as it adds £60 to an economy fare and £120 to a business ticket.

By comparison, the aviation tax out of Dublin airport is a mere €3. Continental Airlines told MPs that operating the service would cost it £3.2m in APD this year, rendering the route unviable.

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