8 Sep 2015

Newcastle International Airport submits response to Air Passenger Duty discussion

08-09-15

Newcastle International Airport has today responded to the discussion paper on the options for supporting English regional airports from the impacts of Air Passenger Duty (APD) devolution in Scotland.

The predicted impact of devolved APD upon the airport and the North East is so great that ‘do nothing’ is not an option and any reductions in APD in Scotland should be matched across the rest of the country. If this is not possible, then Scottish reductions should be matched at all non-congested UK airports.

Varying the rate of APD within England would ensure the commitment made by the Prime Minister before the General Election in respect of England’s regional airports is honoured.

During the recent General Election campaign, the Prime Minister said: “The SNP Government in Scotland is committed to using its new powers to cut and eventually abolish Air Passenger Duty from Scottish airports.

“This could distort competition and see business drawn north of the border with a huge impact on airports in the rest of our country so we’re reviewing the way Air Passenger Duty works to make sure other cities don’t lose out.”

Newcastle International Airport welcomed these comments, which we see as a Government commitment not to allow devolution to disadvantage any airports.

Together with seven other regional airports, Newcastle International has written a joint letter to the Chancellor of the Exchequer in support of the national aviation view that any reductions in APD in Scotland - and potentially Wales - should be immediately matched across the whole country.

The letter recognises, however, that an across the board matching is not one of the options in the discussion paper and that the government might feel that this would be too significant an intervention at this stage. If, therefore, this is not possible, then we have reached a common view that a version of the second of the options in the discussion paper, the varying of rates within England, is the most preferable.

David Laws, Chief Executive at Newcastle International Airport, said: “The airport plays a vital role to the North East economy, supporting 7,800 jobs and directly contributing £403 million to regional Gross Value Added (GVA) every year.

“In recent years, we have secured new air services including Emirates to Dubai and United Airlines to New York.

“If the Government were to agree to our preferred option, our modelling shows that Newcastle International Airport would be protected from the impacts of devolution to Scotland. It also shows that a significant contribution would be made to the rebalancing of the economy, and delivery of key Government strategies including the Northern Powerhouse.”

“Our modelling shows that if a 50% reduction in Scotland is matched at non-congested airports across the rest of the country, then passenger numbers at English regional airports would be boosted by up to 6.5 million per year by 2025. If a 100% reduction in Scotland is matched then the number would be boosted by 16.5 million per year by 2025.”

“The modelling suggests that if a 50% reduction in Scotland is matched at non-congested airports across the rest of the country, then the total boost to UK GVA would be £1.2 billion in 2015. If a 100% reduction in Scotland is matched then the additional GVA would be around £3 billion in 2025.”

Quick guide to the impact of APD scenarios

2025 change in passenger numbers:-

  • In the base case, where APD is reduced in Scotland but not in England, Newcastle would see a reduction in passenger numbers of up to 510,000;
  • In the status quo scenario, where there are no APD reductions anywhere, there would be no change in passenger numbers compared to currently forecast growth;
  • In the 100% reduction scenario, where a 100% reduction in APD in Scotland is matched at non congested airports in England, Newcastle would see a 1,300,000 passenger increase compared to base case scenario, and a 790,000 increase compared to the status quo scenario.

To view the discussion paper on options for supporting English regional airports from the impacts of air passenger duty devolution, please visit: https://www.gov.uk/government/publications/discussion-paper-on-options-for-supporting-english-regional-airports-from-the-impacts-of-air-passenger-duty-devolution