MLAs call for end to air passenger duty
Air passenger duty should be abolished across the UK, a Stormont committee has said.
The tax hurts businesses, fliers and the wider economy, the cross-party group of MLAs said.
In November, air passenger duty (APD) rates were cut to £12 (€15) per passenger in economy and £24 (€30) for business and first-class passengers for direct long-haul routes from airports in the North.
The committee report said: "APD is a regressive tax which is particularly disadvantageous to businesses, consumers and the wider economy in Northern Ireland, given both the peripheral location of the region, which results in greater dependence on air travel, and the proximity to airports in the Republic of Ireland which hold a competitive advantage."
Last autumn's reduction in the rate of duty guaranteed the continued operation of the Continental Flight from Belfast International to New York/Newark, which was under competition from Dublin.
The cost of the tax could have killed off the daily service between Belfast and New York.
The old rates added £60 (€75.20) to an economy fare and £120 (€150.40) to a business ticket.
Continental said it had been absorbing the cost in Belfast in order to avoid passengers simply opting for Dublin.
This, the company told MPs recently, would cost them £3.2m (€4m) this year and meant the route was no longer viable.
Today's Stormont report said: "The negative consequences for Northern Ireland will be exacerbated by the further increases in APD rates levied by the UK Coalition Government from 1 April 2012.
"These increases are being applied despite evidence that APD is also damaging the wider UK economy. The Executive, in the first instance, should continue to press the case with other devolved regions, local authorities and other bodies throughout the UK for the abolition of APD."
The committee welcomed proposed devolution from London to Belfast of APD rates on long-haul destinations as an important step towards redressing the disproportionate burden of APD on the North.
It commended ministers for the action which has been taken to safeguard the Belfast-New York connection.
It said Finance Minister Sammy Wilson and colleagues should plan to take advantage of economic opportunities linked to the devolution of powers over long-haul APD to Stormont to encourage connections to business and tourism hubs.
The committee added that cutting the rate on domestic and short haul services would affect 98% of flights from Northern Ireland and could cost £60m (€75.2m) a year.
It said: "Given both Treasury's insistence on devolution rather than exemption of APD and the determination of the UK Coalition Government to retain APD at a UK level as a revenue-raising measure, any future reduction in APD on band A flights from Northern Ireland is likely to be achieved only through the further devolution of powers to also cover band A (domestic and shorthaul) rates."
The report called for independent expert research into the business case for reducing or abolishing APD on band A flights including: an assessment of the cost of inaction; forecasting of options; and lessons from other EU states which have reduced or abolished APD, including examples where governments attached conditions to APD reductions to ensure benefits for consumers or the wider economy.
Committee chairman Conor Murphy said: "The evidence provided to the committee shows that APD is especially damaging to the local economy and unfair to consumers here, given the peripheral location of the region, with its greater dependence on air travel, and the competitive advantage enjoyed by Dublin airport in particular."
