English airports fear damage from lower Scots levy if APD is devolved

Scotland's campaign to gain control of air passenger duty (APD) has been undermined by fierce lobbying from regional airports in the north-east of England, including Newcastle, which fear it would damage their competitiveness.

The revelation comes as finance secretary John Swinney and infrastructure secretary Alex Neil wrote to the Treasury calling on it to rethink its decision not to include the devolution of APD to Holyrood in the Scotland Bill.

English airports are worried the Scottish Government would scrap or lower levies, prompting long-haul carriers to withdraw from some of their sites and focus on Scotland.

It is thought a reduction in APD by Holyrood would also encourage passengers to fly in and out of Scotland and use the train network for onward journeys south of the Border, rather than pay higher prices to fly to small English regional hubs, such as Robin Hood Airport on the edge of Doncaster.

Regional airport bosses are acutely aware that the loss of key routes can spell the death of transport hubs after Plymouth Airport shut its doors before Christmas after losing its London service in February.

Transport bosses from the north-east of England have urged Westminster to instead introduce a "congestion charge", which would see the likes of Gatwick, Heathrow, Stansted and Luton pay more tax and give regional airports a greater opportunity to compete.

Graeme Mason, planning and corporate affairs director at Newcastle Airport, told The Scotsman: "The devolving of APD- varying powers to Scotland would be damaging to other UK regions. The north-east would be particular harmed with air services and customers potentially relocating north of Border. Such an outcome would be unfair and potentially illegal under European Union rules.

"We have proposed a congestion based approach to differentiation which would benefit both Scotland and regions like the north-east of England."

However, Scotland argues that, following his decision to lower APD in Northern Ireland, there is a strong case for Chancellor George Osborne to implement the recommendations of the Calman Commission and hand control of the tax to Holyrood. It was first suggested nearly three years ago.

Despite the commission's recommendations, APD was a major omission from the Scotland Bill.

In their joint letter to Chloe Smith, economic secretary to the Treasury, Swinney and Neil said: "The failure of the Westminster government to address the concerns of airports in England about the negative impact of the duty on their competitiveness is not a reasonable argument to delay devolution and deny the Scottish Parliament the ability to do so.

"At present the structure and level of the duty is set by Westminster and, as currently structured, merely serves to make Scottish airports uncompetitive in the global competition for new international air routes."

The campaigns to either devolve APD or scrap it altogether are set to hot up as travellers face a double rise in April, after the Chancellor agreed to a freeze last year. All the major airline bosses have called unanimously for the tax to be scrapped, claiming that it harms Britain's competitiveness.