Prestwick nationalisation underlines need for transfer of Air Passenger Duty say SNP

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  By Angela Haggerty
 
Scotland should be given powers to control Air Passenger Duty (APD) rates in a bid to halt the damaging effects to the aviation industry as a result of Westminster hikes, according to the SNP.
 
Increases in APD rates began in 2007 and the most recent rise was in April this year by eight per cent. 

But according to a report released in 2012, short haul passengers were already paying 160 per cent more than they were in 2007 while medium and long haul passengers faced a cost increase of nearer 360 per cent.

Prestwick Airport has been hit hardest by the changes with a 14 per cent loss of traffic and the report estimated as much £50m could be lost from the Scottish economy by 2016 due to the wider impact of the changes on other industries, such as tourism.

Following the recent announcement by Deputy First Minister Nicola Sturgeon that Prestwick Airport will be nationalised, the SNP will debate the APD issue at next weekend’s party conference and South Scotland SNP MSP Chic Brodie, who has led efforts to raise funding for Prestwick since his election, warned that Westminster’s APD policy was harming the economy.

“The level of APD is so uncompetitive, that it hurts the economy as a whole – not just the aviation sector,” said Mr Brodie.

“If Scotland had powers to set our own APD rates we could give our aviation industry and travellers a better and fairer deal, and businesses a competitive tax regime which is more in line with mainland European nations.”

Ayrshire’s Labour MP Brian Donohoe last week agreed that the level of APD was harming Prestwick Airport but refused to join the SNP in calling for it to be devolved to the Scottish Parliament.  Mr Donohoe insisted that he wanted the issue to be addressed UK wide.

Last year, Prestwick Airport boss Tom Wilson said that APD was the single biggest issue faced by the aviation industry and bosses at Easyjet, Ryanair and Virgin Atlantic warned that the increases would damage the wider economy and hit hard-working families when prices rose again this year.

It’s estimated that a family of four could pay £52 for a short haul holiday flight when before the changes began in 2007 the cost would have been just £20. The same family flying long haul – which has been hit the most by the rises – could pay £260 in APD as opposed to £80 pre-2007.

However, the UK government has defended its policy, with Economic Secretary to the Treasury, Chloe Smith, saying that the most recent rise would mean “most passengers” would pay only £1 more than the previous year.

At Prestwick Airport, passenger numbers have dropped from a high of 2.4 million in 2007 to just over a million a year and the airport has been running at an annual loss of £2m.

The Scottish Government intervened in the situation after attempts to sell the airport over the last 18 months by New Zealand-based owner Infratil failed to attract a serious buyer.

Mr Brodie added: “I warmly welcome the Scottish Government’s decisive actions this week to safeguard the future of Prestwick Airport.  For people living in and around Prestwick, there is no bigger visual reminder of Westminster’s failure to look after Scotland’s interests than our local airport.

“Prestwick has a positive future ahead of it but Scotland needs control over APD to ensure we are doing all we can to boost growth, tourism and increase business connectivity.”

The Scottish Government will now enter a six-week period of negotiations with Infratil to finalise the takeover.