Posted on Thursday 5 March 2015 by Ulster Business
Abolition of airport passenger duty (APD) on flights leaving Northern Ireland will not offer a significant boost to the economy here, according to an economic impact assessment commissioned by the enterprise and finance departments.
The report said the economic benefits of removing the £13 tax on short haul flights aren’t enough to offset the cost to the public purse.
“The most likely outcome from a reduction in APD would deliver a small positive net economic benefit (and that is based on a lower tax cost), however… a strong case for change has NOT been made,” the Northern Ireland Centre for Economic Policy (NICEP), which carried out the assessment, said.
Proponents of a removal of APD argue that Northern Ireland is losing passengers, tourism and potential business to Dublin airport, particularly after the Republic abolished the tax last year.
But NICEP said the Department of Enterprise Trade and Investment should take a different tack to boost air connectivity to and from Northern Ireland.
“DETI may wish to consider a more direct targeted intervention. One example could be a programme to stimulate route development to primarily business destinations (rather than holiday destinations).”
APD has already been abolished on long haul flights from Northern Ireland, although the only service which currently comes under that banner is the Newark service from Belfast International Airport.
Brian Ambrose, Chief Executive of George Best Belfast City Airport, said he welcomed the report as a first step to address a serious issue.
“Ignoring the realities of the current situation simply isn’t an option - Northern Ireland is losing out,” he said in a statement. “I believe there is potential in both a 50% reduction in APD and an Air Route Development Fund and will be working with the Executive to explore these options further.”
Belfast International Airport Managing Director Graham Keddie said the report had missed the mark.
“This report fails to acknowledge the blatant and unique geographic challenge faced by Northern Ireland in UK terms, ironically at a time when both Scotland and Wales are pressing their case to have powers over Air Passenger Duty devolved.
“Northern Ireland needs direct access from the outside world. If visitors do not touch down on our runways, by definition they spend much less of their overall time in the region. This results in thousands of jobs in the air transport and hospitality sectors being jeopardised or simply not realised.”