Air tax 'damaging Northern Ireland economy' but report says Stormont can’t afford to scrap £13-a-journey levy
A report prepared for the Executive has said there isn't a strong enough case for ending a £13 air tax on flights in Northern Ireland.
Air passenger duty (APD) has already been cut on long-haul flights, but still applies to the majority of flights here. Business groups have called for it to be scrapped to help Northern Ireland compete with the Republic.
The airline industry has long called for an end to air passenger duty (APD) in Northern Ireland in order to make it competitive with the Republic - which scrapped it last year.
But an extensive report for the Executive examining the impact cutting the duty could have highlighted a massive tax shortfall, outweighing any increase in additional passenger numbers.
That would mean Northern Ireland suffering a £55m reduction in its block grant from Westminster. The in-depth 67-page report by the Northern Ireland Centre for Economic Policy said a "strong case for change has not been made".
But International Airlines Group (IAG), which owns British Airways - headed by Dublin man Willie Walsh - told the Belfast Telegraph APD was an "anti-business tax that should be abolished entirely to boost aviation and tourism in Northern Ireland".
"Aviation generates economic growth and jobs. It cannot make sense for Northern Ireland to have hundreds of thousands of passengers crossing the border to fly from the Republic," a spokesman said.
Belfast International Airport's managing director Graham Keddie accused the report of failing to "acknowledge the blatant and unique geographic challenge faced by Northern Ireland".
"Dublin vividly recognises the opportunity which the continued air tax levy in Northern Ireland offers them to grow business directly to Northern Ireland's economic detriment," he said.
"Northern Ireland needs direct access from the outside world."
Enterprise Minister Arlene Foster said the report showed the scrapping of APD was "not considered to be a strong economic development tool".
The report said the "economic benefit" to Northern Ireland would be negative.
It predicts a 12% increase in passengers numbers should the duty be scrapped. But it suggests "route development to primarily business destinations" as an alternative method of attracting more passengers.
APD applies to short-haul journeys which make up the vast majority of flights leaving Northern Ireland each year.
The other option outlined in the report is cutting APD by half, which it says would be the "optimum solution".
Belfast City Airport's chief executive Brian Ambrose said Northern Ireland was "losing out".
Ann McGregor, chief executive of Northern Ireland Chamber of Commerce, said she was "disappointed by the findings" of the report adding, however, that "it is understandable given the pressures on the block grant".