Air passenger duty and regional airports
On 20th October 2015 Rebecca Long Bailey made her first contribution as shadow Exchequer Secretary to the Treasury, this can be viewed on Parliament TV by following this link:-
The contribution begins at exactly 3:21pm
This is an important debate on a topic that is of concern to me not only in my capacity as shadow Exchequer Secretary, but because my constituency will be affected.
Air passenger duty was highlighted in recommendations by the Smith commission. I reiterate my party’s support for the implementation of the commission’s recommendations as set out in the Scotland Bill. Inevitably, that will have consequences, but that should not undermine the principle of devolution for Scotland, and indeed Wales and Northern Ireland. That said, we cannot escape the fact that the Scottish Government’s anticipated reduction of air passenger duty by 50% in the next five years and their intention to abolish it altogether when finances allow are predicted to have a significant effect on regional airports in England, especially those close to the border. HMRC research conducted in 2012 suggested that the number of passengers using Newcastle airport would decline by 10% the short term, and that Manchester, the closest airport to my constituency, would lose almost 5%.
My hon. Friend the Member for Blackley and Broughton, whose constituency neighbours mine, cited evidence in a previous debate on this issue that if one easyJet and one Ryanair flight were moved from Manchester to Glasgow, the Treasury would lose £2.9 million and 450 jobs would be lost in Manchester. That is of course a forecast, but we can already see the effects of variable rates of air passenger duty by examining the situation in Northern Ireland. Belfast International has suggested that it loses between 570,000 and 1.5 million passengers a year to Dublin airport, where no APD is levied. Dublin airport has run a marketing campaign specifically targeted at attracting Northern Ireland passengers, and in 2013 the number of passengers from Northern Ireland using Dublin airport increased by 12%. With the possibility of powers to determine APD rates being devolved to Wales in due course, the issue is set to have an impact not only on airports in the north of England, but on those in the south-west.
I was saying that the possibility of powers to determine APD being devolved to Wales could lead to an impact on airports in the north of England and the south-west. York Aviation has predicted that, with Cardiff airport no longer subject to air passenger duty, Bristol airport would lose 440,000 passengers, up to 33 routes, 1,500 jobs and more than £800 million from local GDP. That concern has been cemented by a warning from Ryanair’s commercial chief that the company could double its profits per passenger by flying from Cardiff instead, should APD rates be set to zero there. It is therefore clear that the devolution of powers to set air passenger duty will have a profound effect on England’s regional airports, so I am glad that the Conservatives heeded the advice of my colleagues the then shadow Chancellor Ed Balls and my hon. Friends the Member for Streatham (Mr Umunna) and for Barnsley East (Michael Dugher) when they wrote to the Government in September last year, calling on the Treasury to start work on a mechanism to prevent English regional airports from being disadvantaged by devolution to Scotland or anywhere else.