In last week’s Autumn Statement, the Chancellor confirmed that the planned increases in APD rates will come into operation from 1 April 2012.
Graeme Mason, planning and corporate affairs directors at Newcastle International, said: "We were very disappointed with the news regarding APD in the Autumn Statement. The double inflation rise in 2012 and the planned extension to business jets in 2013 will both further damage the North East economy.”
The consultation document set out proposals for reform of the current APD banding system, the impact on regional economies, the possible devolution of APD powers to Scotland, Wales and Northern Ireland, its plans to extend the tax to customers aboard ‘business jets’, and seating class distinctions.
Graeme Mason said: “It’s very encouraging that the government is willing to further consider our Airport Congestion Tax proposal which we submitted in response to how APD impacts on regional economies. We have worked extremely hard behind the scenes, alongside Manchester and other airports, to make the case to ministers and civil servants. We are committed to providing the additional information needed to finally push through this plan. Regional air services are disproportionately impacted by increases in APD, and our plan would reverse this impact and actually stimulate the growth of regional airports and the economies of the areas they serve.”
Newcastle International has long argued that APD is damaging air travel in UK regions. Newcastle, Manchester, Leeds Bradford, Birmingham, East Midlands, Bristol, Prestwick, Manston, Humberside and Bournemouth airport put forward an Airport Congestion Tax proposal in June 2011. The partnership obtained legal advice on whether a new differential tax regime can be introduced.
Following a review of the current banding system, Graeme Mason said: “We are relieved by the government’s decision to keep the four band system. It was a concern that in order to reduce the number of bands, the government would have to increase the rate for short haul flights. Given that regional airports predominantly provide access to short haul flights, this would have been bad news for the North East.”
In the airport’s response it raised concerns about the possible devolution of APD powers to Scotland, Northern Ireland and Wales.
Graeme added: “We welcome the decision to not to devolve APD to Scotland. A lower rate of APD north of the border would encourage people to drive long distances for flights they would otherwise get from within the North East. This would lead to airlines relocating services to Edinburgh and Glasgow Airports, much to the detriment of our connectivity. This cross border flow would effectively be the start of the unravelling of APD, but as we would be in the front line, the damage would be earliest and greatest here. We still take the view that if APD can be reduced for Northern Ireland then there is a case for reducing it from all disadvantaged regions, including the North East.”
Newcastle Airport voiced its disappointment over the decisions made today regarding class of seating and business jets.
Graeme added: “It is unfair for Premium Economy seating to be taxed at the higher rate. These seats are much closer to economy than business or first class.
Regarding business jets, he said: “Companies in the North East often need to use corporate jets to get quickly to places that are not served by scheduled air services. The imposition of APD on these flights will make it more difficult to do business in our region.”