Just when you might think that the subject of the Advanced Passenger Duty (APD) had faded away, the Airport Operators Association (AOA), a trade body who represent 55 airports across the United Kingdom, have made it front and centre once again. They have called on the British Chancellor George Osborne to cut the tax by at least 50 per cent in his budget next month and to clearly define the future, if any, of Air Passenger Duty.
It said ‘that it had been waiting since last July, when the UK Treasury announced a review of APD and to find out how the London based Government planned to support airports from the impact of devolution of the air tax in Scotland. The Scottish Government has clearly stated it plans to half APD by 2018 and abolish it altogether, just as soon ‘as public financing permits’ – followed by potentially, Wales. AOA chief executive, Darren Caplan, said ‘Despite the recent changes on the longest haul APD rates and the exemption for children, the UK still has the highest APD rates in the world’. So unless some equity is given to the English airports, then Glasgow, Edinburgh and Prestwick will have a huge operating advantage as early as January 2018, which clearly airlines and tour operators are going to fully exploit.
During the 2015 British General election, the Prime Minister, David Cameron vowed that ‘he would not allow unfair tax competition to damage UK airports’. A promise that if sincere will be put to the test in less than two years from now. With forward planning, airlines and to a lesser extent, tour operators, simply cannot launch new routes and add new destinations at a moment’s notice, if there is any realistic expectation of short to medium term viability.
Another unknown is, if by any chance the United Kingdom voters decide in the upcoming referendum, which could take place as early as June this year to ‘opt’ out of the European Union (EU), what impact could this have on current existing flight treaties?
Barbados’ Minister of Foreign Affairs and Foreign Trade, Senator Maxine McClean and British High Commissioner to Barbados, Victoria Dean, recently initialled a new air services agreement to conform with the rulings of the European Commission, which dictate that all European Union Member States must amend their bilateral air services agreement to permit every European airline to benefit from the provisions of such agreements.
Under this agreement ‘Barbadian-designated carriers can operate to intermediate points and points beyond, and the United Kingdom-designated carriers can operate from points in the UK to intermediate points beyond’.
Given the hypothetical scenario that the UK leaves the European Union, will a sovereign Scotland with added autonomy apply in its own right to join the EU and what effect could that have on existing air services?
While there is a lot of speculation in this contention, I just wonder if our planners have thought through what the effect could be envisaged with Scottish airports having substantially lower, or no APD, with the double whammy of maintaining European ‘Fifth Freedom’ Air Agreement rights?