Aviation tax producing an unlevel runway as Northern Ireland business bids to compete
Northern Ireland’s economic competitiveness could be threatened by a punitive aviation tax, industry experts have warned.
Their comments come as the future of our only transatlantic air route continues to hang in the balance due to contentious air passenger duty (APD).
In February the Belfast Telegraph revealed that the popular Continental service from Belfast to New York (Newark) was in danger.
The route — which is worth around £20m to the local economy — is being threatened by the increase in APD introduced by the Treasury last November.
It meant that a levy of at least £60 was being imposed on each US-bound passenger and prompted travellers from Northern Ireland to instead switch to Dublin airport, where the charge is just €3.
Members of the Executive, including the First and Deputy First Ministers, have been lobbying Whitehall for a cut in the levy.
A consultation on proposals for simplifying the current banding system closed in June and a response is expected in November.
A Treasury spokesman last night said: “The Government will consider the views and evidence submitted by interested parties and publish a summary of responses in the autumn.”
Kieran Patterson, executive chairman of Light Step, which specialises in the design and manufacture of intelligent evacuation systems, said that APD was proving a barrier to his company’s growth.
“We’ve been travelling extensively to the States since 2003 and we’re in the process of signing a huge deal which will require even more travel,” the Belfast businessman said. “When we were devising and writing our business plan flying to America was relatively inexpensive, but it’s becoming exorbitant because of tax.
“If there isn’t a reduction in APD we will have to reduce our travel, and that will definitely curb the growth of the business.”
He added: “There’s no doubt that Ulster’s economic competitiveness will be in danger if the levy isn’t cut and we lose our only link to the USA.”
The Executive wants Northern Ireland to be made a special case, like the outlaying Scottish islands, which are exempt from the aviation levy. As with corporation tax, it believes the province qualifies for special treatment because it borders another country that can undercut it tax-wise.
Ann McGregor, chief executive of the Northern Ireland Chamber of Commerce, said it is vital that we have the strongest range of air access to support the development of the economy and spur job creation and growth.
“Our land border with the Republic of Ireland puts the region
at a unique disadvantage,” she said. “Efforts by the Executive to attract business and investment are being hampered by the aviation tax here and the position is now untenable.
“Only the abolition of APD can safeguard this essential piece of passenger infrastructure and ensure that Northern Ireland remains an attractive location for international investors,” she said.
Dublin Airport currently handles 1.5 million long-haul and transatlantic passengers every year — and Belfast International is desperate to tap into that lucrative market.
Enterprise Minister Arlene Foster (right) said that ministers have made it clear to the Prime Minister that APD adversely impacts on all business sectors in Northern Ireland, in particular our tourism sector and our ability to attract foreign direct investment.
She added: “We are currently in close discussions with Treasury on the way forward for Northern Ireland in respect of the duty.”
John Simpson, one of Northern Ireland’s leading economists, said the seriousness of the situation should not be underestimated.
“In principle it is bad within the economy that anything should be done to taxation to increase the cost of distance.
“And that applies to both transatlantic and trans-Irish Sea flights,” he said.