But Executive says it will help attract new operators
Stormont is paying out more than £2m a year to subsidise a non-existent air route.
SDLP MLA Matthew O’Toole found the Department of Finance was paying out £2.3m a year in order to subsidise air passenger duty (APD) on long haul flights — despite the last trans-Atlantic flight taking off in Northern Ireland almost two years ago.
SDLP finance spokesman Mr O’Toole said it was “outrageous” particularly in the current climate, and while an air link to the US was positive, the policy was “abysmally designed from the outset”.
He said: “This policy was supposed to be a flagship of the last Executive’s economic policy, but was in actual fact the typical mix of chest-beating Ulster nationalism and client capitalism.
“The blunt truth is that most long haul visitors to the north will come via Dublin Airport or London. As we come out of this crisis, we need a properly thought-through long-term economic response, including a strategy to rescue our short-haul connectivity — not half-baked schemes like this.”
Norwegian Air’s last long-haul flight took off in autumn 2018.
Mr O’Toole said it meant around £6m pounds has been paid to the Treasury to subsidise flights that do not exist between 2018/19 and 2020/21.
The Department of Finance said, as the matter had been devolved, it was obligated to make up for the shortfall in estimated duty to the Treasury in London as was required under state aid rules.
“It is disappointing that these services have ceased, but having a zero rate of direct long haul APD will help us in trying to attract long haul services as we seek to recovery from this crisis,” a spokeswoman said.
Mr O’Toole said the “absurdity” of the situation had only been exacerbated by the Covid-19 crisis, which has hit the aviation sector hard. He said the money could be used to help rebuild “critical short haul” routes to Britain or for other sectors struggling through the coronavirus pandemic such as local media or for paying substitute teachers.
“The current situation, where millions has been spent on subsidising long haul flights with little prospect of returning, is unacceptable and should have been addressed already by the Department of Finance,” he added.
“The scandal also highlights the need for the Northern Ireland Executive to produce a proper strategy for economic renewal that is linked to its financial position and fiscal levers.
“Subsidised long-haul APD for Northern Ireland was meant to be a flagship of the last Executive’s economic policy, but it has proven to be a costly white elephant, with taxpayers meeting the expense of theoretical transatlantic routes when the greater priority for the local economy should be short-haul connectivity to Great Britain.”
He added: “With global aviation in turmoil, the risk of a successful state aid claim against the UK in the coming months would be zero. It is absurd that this money is still being committed and the department should have done something about it already.”
The route between Belfast International Airport and Newark Airport first began in 2005, operated by Continental Airlines.
United Airlines took over the operation of the route in 2012 following a merger with Continental before poor financial performance rendered it unsustainable. A £9m rescue deal agreed by Stormont and United collapsed a few months before the route was halted because it was deemed to breach EU state rules.
Norwegian pulled its route in October 2018 blaming lack of demand.
Air passenger duty for long haul flights was devolved in 2012 to support a New York link with Belfast.
In his response to Mr O’Toole’s Assembly question, Finance Minister Conor Murphy said the mechanism for estimating the subsidy “is based on the duty raised at that time, not the duty payable on current flights”.
He added that the money for the subsidy had to be handed over to the Treasury, as under state aid rules, the Assembly was required to bear the cost of any financial consequences when the tax was devolved.