Reducing APD in Wales

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Cardiff Airport © Richard Swingler

Yesterday morning the First Minister, Carwyn Jones, said that the Welsh government would aim to scrap air passenger duty (APD) on long-haul flights if the tax was devolved to Cardiff.

Nicola Sturgeon said similar things about APD when it was devolved to Scotland. She has run into problems implementing any change because it requires an EU decision. Jones will face the same problem so why say things he is unlikely to be able to deliver?

The probable answer is that he only said it because he wants APD devolved to Cardiff just as it has been done to Edinburgh. That seems a fair argument. If one country in the UK has rights to vary APD (or whatever they want to call the tax) then why not all countries?

Where he is on dodgier ground is his claim that if the Welsh government had the ability to alter APD, any move to cut it on long-haul flights would have little impact on Bristol Airport but that it could boost Cardiff Airport passenger numbers by a third, or 500,000 a year. He also said that such a cut would only cost £1 million pa. The research also says that abolishing the tax on all flights, combined with additional route development incentives, could even raise Cardiff passenger numbers by nearly 50%, adding 658,000 extra passengers a year by 2025.

Carwyn Jones

He cites consultancy work done by Northpoint Aviation Services as the reason for these comments.

But when Bristol Airport commissioned York Aviation to assess the impact for Bristol Airport of APD reductions in Wales it reached an opposite conclusion saying it would cost jobs and a loss of income for the local community. But they were looking at all flights not just long-haul ones

Which consultant is right? Or is each putting a spin on the results to say what they want it to say?

The only reliable case we have is the impact on the removal of APD in Ireland and the effect that had on Belfast airports. There Belfast lost business as people drove south to Dublin and caught flights from there.

The same would be likely to happen if fares were cheaper from Cardiff than Bristol. We examined passenger leakage (people who chose not to use their nearest airport but one further away) almost three years ago. Then of all those who live in the CF – the Cardiff area postcode – only 64 % of them flew from their local airport. The others opted for Bristol, Birmingham, Gatwick or even Manchester in some cases despite the distances involved and, in some cases, of having to pay the Severn Bridge toll as well.

So it seems unlikely that there would not be some effect.

Where Jones is probably right is by saying that the impact by reducing APD on long-haul flights will hardly affect Bristol. But this is because Bristol only has eight out of over 120 destinations that are long haul ones and Cardiff has only two. When Qatar Airlines starts its Cardiff to Doha service next year this could substantially change matters.

But the selective use of reseach won’t disguise the fact that people will go the airport that offers better prices and/or better scheduled timings and/or routes that they want to use.

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