“UK Government must do more to protect Highlands & Islands Airport Passenger Duty exemption”

SNP MP, Drew Hendry has called on the UK Government to deliver on its responsibilities to the Highlands & Islands on Airport Passenger Duty (APD) exemption.

The Highland MP made the comments today during a Westminster debate on Airport Passenger Duty.

The Scottish Government plans to reduce the tax which is one of the highest of its kind in Europe by 50%, to benefit the Scottish economy and to encourage more flights at Scottish Airports.

However, implementation has had to be delayed because the way APD has been devolved by the UK Government, puts at risk the long standing Highlands & Islands exemption. 

Highlands and Islands airports have had exemption from Air Passenger Duty since 2000, because of the area’s low population density as a definition of its peripherality.

This arrangement increases the viability of flights to the region and reduces costs for air travel for Highland & Islands residents.

Even with this exemption in place, air fares to and from the region remain higher than many other areas of the UK.

In the current form APD has been devolved, it is likely that the existing exemption would need to be assessed by the European Commission, under EU State Aid rules and can only be resolved through UK Government intervention.

During the debate, Mr Hendry told Exchequer Secretary to the Treasury, Robert Jenrick, the UK Government had devolved a power not fit for purpose.

Commenting, Mr Hendry said:

“Air Passenger Duty is one of the most expensive taxes of its kind in the world and hampers Scotland’s ability to secure new direct international routes and maintain existing ones.

“That is why the Scottish Government remains committed to a 50% reduction through its new Airport Departure Tax and want to get on and deliver it.

“However, the Scottish Government cannot do this, until the issues around Highlands and Islands exemption have been resolved.

“The Scottish Government recognises how crucial this exemption is to the Highland economy. Even with the introduction of new flights our air connections remain some of the most fragile across these isles.

“The Smith Commission was very clear when it stated that: ‘the power to charge tax on air passengers leaving Scottish airports will be devolved to the Scottish Parliament. The Scottish Government will be free to make its own arrangements regarding the design and collection of any replacement tax’, yet, as we have seen time and time again with this Government, the arrangements on offer, limits the ability of the Scottish Government to make changes to benefit the Scottish economy. 

In his response to the Highland MP, Mr Jenrick confirmed that his department was willing to work closer with the Scottish Government to find a solution to the problem, recognising the commitment outlined in the Smith Commission.

Responding after the debate, Mr Hendry said:

“I am glad that the UK Government recognises it has failed to hand over APD in a workable way, and that Airport Departure Tax cannot be implemented by the Scottish Government without a solution to this problem.

“I hope that the assurances from Mr Jenrick today, are followed up by meaningful action from the UK Government, to enable the Scottish Government to introduce its reduced Airport Departure Tax, while protecting the Highlands and Islands exemption.