Belfast Telegraph

Wednesday 27 August 2014

Air passenger duty still causing lots of turbulence

In news as surprising as a queue at Heathrow, we learned last week that airline bosses don't like the tax they are charged for carrying passengers.

The BA, easyjet and Ryanair bosses who breezed into Parliament to appear before the Northern Ireland committee last week did not agree on much. But what did unite them was their hatred of air passenger duty (APD).

APD is the Treasury's way of making money from air travel. A charge is slapped on every passenger's flight, from £13 on a short-haul economy class, up to £184 if you fly first class around the world.

And anyone who was sitting in on the committee on Wednesday would think it is an evil barrier to growth that must be removed.

Thus BA supremo Willie Walsh told MPs George Osborne was "scared" at looking into scrapping it, while Ryanair's Kate Sherry said the tax was the reason Michael O'Leary's company won't invest in Northern Ireland.

And they're not alone. A recent poll found that half of MPs were in favour of a cut, while Northern Ireland's MPs have not been pacified by the cut to the long-haul rate announced by George Osborne a year ago.

All of them have signed a Commons motion branding APD a deterrent to investment and tourism.

After it was frozen in 2011, APD increased with inflation in April and is set to go up again in 2013. Every time this happens, business chiefs say, Northern Ireland becomes less competitive compared to Dublin.

Listening to Mr Walsh last week, one might think that scrapping APD is a no-brainer. But the Treasury would point towards the £2.1bn it contributed to its coffers last year - no small beer when you're trying to cut the deficit. Likewise, they would say, lower corporation taxes are helping British Airways and co, so APD cannot be taken in isolation.

After intervening over Northern Ireland's long-haul flights to save the transatlantic link, there are few signs the Government will concede more ground.

And any further measures aimed at Northern Ireland would provoke howls from MPs representing remote parts of the UK - in bits of northern England and Scotland, there is already the perception that Belfast was given preferential treatment.

Who better to give the Government's view than Theresa Villiers, former Aviation Minister and now Northern Ireland Secretary?

She says it is "fair" for aviation to make its contribution; pointing out that the industry does not pay duty on the fuel it uses.

Such is the strength of the lobby for a cut, it's a line she will get used to repeating in the coming months.

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