Belfast Briefing: Airports want departure of ‘obnoxious’ tax

The London-headquartered airport security company ICTS is today set to announce plans to create 40 additional jobs in the North. The jobs boost at Belfast International Airport (BIA) comes on the back of Ryanair's decision to open a new base at the airport from March and initially operate a four-times-daily service to London Gatwick.

The airline later intends to grow its operations to three aircraft and five more routes, which it believes will deliver one million new customers for the airport each year.

Ryanair's new landing in BIA will in turn, according to Graham Keddie, the airport's managing director, help generate 750 additional "on-site" jobs, the first of which have come from ICTS today.

But Keddie believes this is merely a drop in the ocean compared to the jobs that could be created at the airport if Northern Ireland could just level the playing field with its key competitor – Dublin Airport – by getting rid of what he calls an "obnoxious and regressive tax".

The tax Keddie is referring to is the UK’s air passenger duty (APD) which every airline passenger has to pay when departing from any airport in the North.

The UK’s APD rates vary depending on the destination and ticket class, but on the whole most people currently pay £13 on the price of a short-haul ticket. There is no equivalent APD on direct long-haul flights from the North because three years ago the British government devolved the tax on direct long-haul flights from the North to the Northern Ireland Executive. This gave the Executive the power to abolish the tax.

Abolished

But now the real bug bearer for Northern Ireland’s three airports – BIA, Belfast City and the

City of Derry

– is that in the Republic there is no equivalent of APD because it was abolished by the Government.

Northern Ireland airport bosses claim when you take the zero rate of APD on flights from the South, plus the very favourable sterling/euro exchange rates at the moment, it’s costing them thousands of air passengers every year – or precisely 864,000 in 2014, according to the latest statistics from Dublin Airport.

A major inquiry, currently under way at the House of Commons, looking at how the UK government can help to promote the North’s tourism industry through the tax system has now turned its attention to APD.

Brian Ambrose, chief executive of Belfast City Airport, has told this inquiry that the North is not just losing air passengers to the Republic. He says there is an even bigger cost to the local economy because for every one million people in the North who decide to drive south to fly from an airport – chiefly to Dublin – Northern Ireland is losing out on a potential 700 jobs that would be created if they flew from home.

Ambrose says that because of a number of factors from the size of cities to local populations it would be unrealistic to forecast that the North could ever achieve the same international connectivity that Dublin has. But he believes that if Dublin Airport can support any route three times a day it is fair to say that an airport in the North could support the same route at least once daily if the right commercial environment was in place.

New air routes

According to Keddie, his airport, which saw passenger numbers hit the 4.4 million mark last year, could attract dozens of new air routes if APD was taken out of the equation. “We could reasonably double in size to over 8 million.”

He has accused the North’s government of “abdicating responsibility” for dealing with APD, while he says the North is “plastered” with adverts promoting Dublin Airport.

A report by the Northern Ireland Centre for Economic Policy last year concluded that the net economic benefits of reducing the air tax would be relatively small because the Executive would ultimately have to pay for it and it could cost them up to £60 million from the block grant.

Neither Keddie, Ambrose or Clive Coleman, who is responsible for the management of City of Derry Airport, have bought into this report.

For starters they say the industry was never consulted about it. Instead what they would like to see is not a report but some action on APD.

Otherwise they fear the new road from the North down to Dublin is going to get even busier this summer.