UK Government blocks devolution of Air Passenger Duty to Wales

Cardiff Airport statement: UK Government’s decision to block the devolution of Air Passenger Duty (APD) to Wales


Deb Bowen Rees, CEO of Cardiff Airport, said: “We are hugely disappointed by today’s announcement.
“Cardiff Airport has always been in favour of the UK-wide abolition of Air Passenger Duty and in support of the ‘A Fair Tax on Flying’ campaign. It is a punitive tax on travel and a cost that hinders the ability for the United Kingdom to remain competitive in what is a very competitive, fast-paced global industry. Not to mention, the UK APD rate is one of the highest in the world.

“We presented compelling and robust evidence to the Welsh Affairs Committee to demonstrate how beneficial this would be to both Wales and the South West as a region. The WAC then went on to make their own impartial, confident recommendation to the UK Government that demonstrated complete, cross-party support for the devolution of Air Passenger Duty to Wales.

“It is difficult to understand the timing and the reasoning behind today’s decision. This would have been a real post-Brexit boost to the region, enhancing international connectivity and promoting competitiveness within the industry. Furthermore, it would lead to environmental benefits, enabling customers to fly locally and, in turn, drive significant economic benefit to Wales and the South West of England.”

 

I'll delete if this link is against house rules. Nice little summary of what's been said on here really.

Westminster is deliberately holding back Cardiff Airport – and Wales’ economy – to favour Bristol

David Williams This morning the Welsh Government has accused the Westminster Government of deliberately holding back plans to boost the number of domestic routes from Cardiff Airport. This isn’t a surprise as the Westminster Government has shown every indication of wanting to hold back the...

nation.cymru

No, it's perfectly acceptable to post this link. All shades of opinion are welcome.

Thank you for drawing it to our attention.

 

I still cannot understand why an internal flight from north to south Wales is subject to APD, when it is no competition for Bristol or Liverpool. It is restricting route growth by a small fare reduction and limiting the size of the aircraft. Definitely anti - welsh bias.

 

I still cannot understand why an internal flight from north to south Wales is subject to APD, when it is no competition for Bristol or Liverpool. It is restricting route growth by a small fare reduction and limiting the size of the aircraft. Definitely anti - welsh bias.

If you mean the Cardiff-Anglesey service, that's a PSO (Public Service Obligation) flight. APD is not levied on PSO flights.

 

I still cannot understand why an internal flight from north to south Wales is subject to APD, when it is no competition for Bristol or Liverpool. It is restricting route growth by a small fare reduction and limiting the size of the aircraft. Definitely anti - welsh bias.

It isn't.
Although the Nation Cymru article does have a lot of bias it does have a point in that with Bristol at 8.6 million passengers and Cardiff at 1.6 million. Cardiff isn't a threat to it. Both airports have grown over the last few years but Bristol is still way ahead and doesn't seem to be effected by Cardiff's growth at all.

 

... limiting the size of the aircraft. Definitely anti - welsh bias.

The UK Gov (M.O.D) has repeatedly rebuked the Welsh gov's applications to be able to fill the aircraft. At present the flights are limited to 19 pax even though the JS41 aircraft on the route have a capacity of 29, meaning the Welsh Gov has to pay a higher subsidy per flight and the flights often sell out unnecessarily. I know it's for security reasons, but honestly, how much of a threat will a potential 10 extra pax make??

 

. I know it's for security reasons, but honestly, how much of a threat will a potential 10 extra pax make??

As someone who has used the route I don't see how it's for security reasons? The terminal is a separate building, you go through a security checkpoint just like other airports and you aren't let out onto the ramp until the aircraft is ready to board.

 

As someone who has used the route I don't see how it's for security reasons? The terminal is a separate building, you go through a security checkpoint just like other airports and you aren't let out onto the ramp until the aircraft is ready to board.

I literally have no idea, but that's the reason they give. Coupled with not even passing the PSO requests to the EU and APD refusal, against a number of reports and their own committee's advice, the UK Gov is absolutely doing all it can to stifle CWL and it really does annoy me so much.

 

I literally have no idea, but that's the reason they give. Coupled with not even passing the PSO requests to the EU and APD refusal, against a number of reports and their own committee's advice, the UK Gov is absolutely doing all it can to stifle CWL and it really does annoy me so much.

I think that the attitude across the border is why does Wales need its own airport to succeed or exist? It has Bristol and Heathrow and Manchester. I think it all comes down to the perception of Wales itself and many I believe don't see it as a country but a region and many Welsh people are guilty of the same thing. If you look at the UK governments argument it's always been about protecting England and not looking at how APD could benefit Wales because in reality they don't care about benefitting Wales unless its something that will benefit England as well. Hence the abolition of the tolls and why the UK government is so pissed that the Welsh government won't build the new M4 because that will benefit England.

 

It isn't.
Although the Nation Cymru article does have a lot of bias it does have a point in that with Bristol at 8.6 million passengers and Cardiff at 1.6 million. Cardiff isn't a threat to it. Both airports have grown over the last few years but Bristol is still way ahead and doesn't seem to be effected by Cardiff's growth at all.

A couple of points.

First, It's not just BRS that might be adversely affected if CWL gained an undoubted tax advantage assuming that the WG did reduce or abolish APD if given the power. The CWL CEO seems to think they would.

If BRS is restricted to 10 mppa in the years ahead it's not unrealistic to think that airlines that might have set up at BRS or current ones at that airport that might have increased their output would look to an alternative airport.

BHX could benefit but the likelier ones would be CWL and/or EXT. With all the so-called BRS-CWL rivalry it's easy to forget that EXT is also in competition with BRS. It's no further from parts of the Bristol city region than CWL and is just off the M5 motorway. About 1.5 million journeys at BRS each year are made by people originating or terminating in Devon and Cornwall. Were CWL to have an APD advantage over EXT it's highly likely that would sway an airline.

As things are at the moment the Azores criteria makes it unlikely that a state could vary APD rates within it. An autonomous regional authority within a state (and for this purpose Wales and Scotland are so regarded with the UK being the EU member state) can have APD responsibility devolved to it but, as with a state, rates cannot be varied within that autonomus regional authority, so for instance the WG could not operate different APD rates at CWL and Valley. So EXT would either have to be part of a sufficiently autonomous regional authority within England to stand a chance of reduced or no APD. All this assumes that a regional authority's budget would be large enough to allow it to reduce/abolish APD.

Of course, if the UK leaves the EU with no deal or one that does not include continued participation in the single market then the EU state aid rules won't apply - unless the Westminster government chooses to adhere to them voluntarily.

Second, it's not a question that BRS might only be only slightly affected in passenger numbers if there was lower or no APD at CWL. The airport is owned by a major pension fund that has net assets worth over 190 billion dollars. The 'shareholders' are the current and future pensioners and, as with any listed company on the stock exchange, the driver is increased profits each year and a rise in the value of fixed assets. If profits drop, and as a result the value of the airport fell as well, BRS becomes less attractive to the pension fund.

Investment might then fall away. As it is, the owners will have some major decisions to make if the airport is stranded on 10 mppa for years to come. Any business that is artifically restricted in growth usually find itself struggling to find ways of increasing profits. The first to feel the pinch are invariably some staff members who will be shown the door, and the service provided to the public also usually suffers.

Jerry - I know that you are aware of much of the above but I have set it out in some detail as some members might not be quite as well versed in the intricacies of the Azores criteria (it's not the most exciting reading and I'm in a position to have the time to read it).

 

Were CWL to have an APD advantage over EXT it's highly likely that would sway an airline.

Yet they never offered any evidence against it and I don't believe were ever mentioned during the Welsh Affairs committee invesigation?
Generally APD has been portrayed as taken away passengers from the big airports. As for the BRS hitting 10 million the main airline Easyjet is unlikely to go anywhere near Cardiff or Exeter.

Second, it's not a question that BRS might only be only slightly affected in passenger numbers if there was lower or no APD at CWL. The airport is owned by a major pension fund that has net assets worth over 190 billion dollars. The 'shareholders' are the current and future pensioners and, as with any listed company on the stock exchange, the driver is increased profits each year and a rise in the value of fixed assets. If profits drop, and as a result the value of the airport fell as well, BRS becomes less attractive to the pension fund.

Bristol will continue to be a successful airport and I've no doubt it will eventually get permission to expand.
From my perspective and many others it always sounds like the argument is that APD might effect BRS a little bit so let's not go there but when someone mentions Bristol effecting Cardiff a massive amount we are told it's market competition so you'll have to lump it.

 

There has been a surge in support for an independent Wales to 24% if a referendum was held tomorrow and 33% if Wales was given the option of staying in the EU as an independent state in the scenario of the UK leaving the EU.
When people who said they didn't know how they would vote were excluded, the YouGov poll conducted between September 6 and 10 suggests that 31% of people would be certain to vote for independence in a referendum with 41% backing an independent Wales in the European Union if the rest of the UK leaves.
If an independent Wales was then to cut or reduce APD I wonder if there was anything Bristol could do to try and stop it or how they would react to that scenario to counter it?

Support for Welsh independence soars in new poll by YouGov

The poll of more than 1,000 people shows that nearly a quarter would vote for independence if there was a referendum tomorrow

www.walesonline.co.uk

 

If an independent Wales was then to cut or reduce APD I wonder if there was anything Bristol could do to try and stop it or how they would react to that scenario to counter it?

Support for Welsh independence soars in new poll by YouGov

The poll of more than 1,000 people shows that nearly a quarter would vote for independence if there was a referendum tomorrow

www.walesonline.co.uk

If Wales was an independent country whether in or out of the EU there would be nothing a UK government (what was left of the UK) or English government (if the UK had completely broken up) could do to stop Wales doing its own thing with APD, although obviously if Wales was a member state of the EU it would have to abide by the regulations in place there.

It would be very similar to the situation in the island of Ireland. The Republic's aviation tax is much lower than the UK's and nearly a decade ago the UK government cut the APD rate on direct long-haul from Northern Ireland to the short-haul rate and subsequently to nil. This was to try to help BFS compete with DUB on transatlantic, specifically the NYC route (Newark from BFS).

It didn't work and in a last desperate attempt to save the BFS-EWR route the Northern Ireland Executive agreed a £9 million package with the carrier, United. How they thought they could get away with that I have no idea and remember saying so at the time on F4A. It was quickly deemed it to be illegal state aid and the route came to an end.

If Wales and Scotland had become independent countries (the Northern Ireland situation would be a nightmare to resolve) there might be an emasculated UK consisting of the United Kingdom of England and Northern Ireland...I can hear some saying, 'and not so united at that'.

The new UK or England if NI had gone its own way might reduce its own aviation tax if it thought its airports were losing ground to those in the independent Wales and Scotland.

The very unsatisfactory nature of current UK governance, with some countries having devolved governments but with varying powers, is encapsulated in the APD situation.

Scotland has the tax devolved but can't afford to abolish or reduce it.

Wales doesn't have the tax devolved but wants it and it seems could afford to abolish or reduce it.

Northern Ireland has no APD on direct long-haul flights and the UK government is studying options re short-haul APD in Northern Ireland. There are those in NI who say the country could not afford a reduction in APD across the board as the consequent adjustment in the block grant would impact on other services.

England doesn't have its own government so its APD would still be decided by Westminster, even if the other countries had APD responsibility fully devolved to them, with representatives from Wales, Scotland and Northern Ireland having a say and with the possibility of the chancellor representing a constituency in one of those countries as was the case with Brown and Darling.

 

The very unsatisfactory nature of current UK governance, with some countries having devolved governments but with varying powers, is encapsulated in the APD situation.

Scotland has the tax devolved but can't afford to abolish or reduce it.

Wales doesn't have the tax devolved but wants it and it seems could afford to abolish or reduce it.

Northern Ireland has no APD on direct long-haul flights and the UK government is studying options re short-haul APD in Northern Ireland. There are those in NI who say the country could not afford a reduction in APD across the board as the consequent adjustment in the block grant would impact on other services.

England doesn't have its own government so its APD would still be decided by Westminster, even if the other countries had APD responsibility fully devolved to them, with representatives from Wales, Scotland and Northern Ireland having a say and with the possibility of the chancellor representing a constituency in one of those countries as was the case with Brown and Darling.

The UK state as a whole has failed to evolve and i think there is an arrogance at the top that has failed to address this or most likely thinks it doesn't need too. As you pointed out above the devolution settlement is all over the place and APD reflects that. I wasn't surprised that the UK government rejected it but part of me was hoping that they would at least give some concession and copying Northern Ireland could've been the way to do that, devolve long haul direct which would have the minimum effect on Bristol as it has 6 routes that would qualify for that while Cardiff would have 5 routes. They could've then said they were studying options for short haul and i feel that the Welsh government might have settled for that as i feel they are more interested in the long haul side rather than the short haul side.

 

It won't make much difference to whether APD is devolved especially if the Conservatives win the election but one of the major opponents of devolving APD to Wales Welsh Secretary Alun Cairns has resigned as Welsh secretary.

https://twitter.com/x/status/1192052284806565888

 

Glad to see him go. He spent a lot of time holding Wales back, APD being a good example whilst England flourished.

 

It won't make much difference to whether APD is devolved especially if the Conservatives win the election but one of the major opponents of devolving APD to Wales Welsh Secretary Alun Cairns has resigned as Welsh secretary.

https://twitter.com/x/status/1192052284806565888

Glad to see him go. He spent a lot of time holding Wales back, APD being a good example whilst England flourished.

Cairns was a member of the UK Cabinet and therefore was bound by the convention of Cabinet collective responsibility to support the government's policy publicly, whatever his personal opinions. He could argue against the policy in private in Cabinet if he wished but to fail to support the government publicly would entail his having to resign from the Cabint and his post.

I'm no apologist for Cairns, but whoever was Secretary of State for Wales would have to abide by the Cabinet collective responsibility convention, or leave the Cabinet and post.

With Wales, Scotland and N Ireland all having their own devolved governments I don't know why there are Westminster secretaries of state for these countries any more. England doesn't have one or its own government.

 

I'm no apologist for Cairns, but whoever was Secretary of State for Wales would have to abide by the Cabinet collective responsibility convention, or leave the Cabinet and post.

If he wanted to devolve it I think he would have been a powerful voice to possibly tip the balance in favour of it even if only long haul direct was devolved but that is just my opinion. If he gets re elected it'll be interesting to see if he comes out in support of it. Personally I don't think he will as it doesn't fit his 'West Britain' view of the whole area.

 

If he wanted to devolve it I think he would have been a powerful voice to possibly tip the balance in favour of it even if only long haul direct was devolved but that is just my opinion. If he gets re elected it'll be interesting to see if he comes out in support of it. Personally I don't think he will as it doesn't fit his 'West Britain' view of the whole area.

Do you mean a powerful voice in Cabinet? I think the Conservative government, under Cameron, May and Johnson (although the latter might not have shown much interest in the subject given his short tenure and other rather more pressing problems) had decided for a number of reasons that APD devolution was not something of which they were in favour, and I doubt that any Welsh Secretary would have been powerful enough to have turned the decision on his/her own.

Around ten or twelve years ago when Cairns was an AM I had a lengthy exchange of emails with him about civil aviation in Severnside and beyond. I was surprised and appreciative that he took so much time in corresponding with someone he didn't know, wasn't Welsh and didn't even live in the country (I made all this clear from the outset).

He appeared extremely passionate about CWL during our correspondence and very anxious for it to succeeed. He didn't seem to be a particular fan of BRS - the opposite if anything - although there might have been a certain amount of devil's advocacy in both our arguments. I don't think that APD came into the conversation. It probably wasn't as prominent a subject in Welsh Government and Welsh aviation circles then, and it would be more than half a decade into the future before the power was devolved to Scotland.

 

I doubt anyone will listen to them but the Federation of Small Businesses has said that the next UK government should devolve Air Passenger Duty to Wales.

Next UK Government must devolve aviation tax to Wales says FSB

In its manifesto FSB is also calling for a small business commissioner

www.business-live.co.uk

 

I doubt anyone will listen to them but the Federation of Small Businesses has said that the next UK government should devolve Air Passenger Duty to Wales.

Next UK Government must devolve aviation tax to Wales says FSB

In its manifesto FSB is also calling for a small business commissioner

www.business-live.co.uk

I've just read the FSB manifesto.

https://www.fsb.org.uk/docs/default-source/back-to-business-manifesto-2019/fsb-back-to-business-manifesto-2019.pdf?sfvrsn=562f121_4

I know that FSB Wales has been calling for APD devolution for a while, but this is the UK FSB putting the below in its election manifesto:

Give certainty to long-term infrastructure projects, committing to build the airport capacity; local, regional and high speed rail and energy infrastructure we need. Devolve Air Passenger Duty to Wales to support the development of new international trade and tourism routes.

Reverse chronic underinvestment in rail infrastructure in Wales by committing to the electrification of the South Wales mainline to Swansea and investing in Growth Track 360 in North Wales.

They seem to be championing the cause of their members in one area of the UK which could have a negative effect on their members in another. The South West is equally in need of rail improvement - Plymouth for example has no motorway, no airport and is at the end of a slow and tortuous though picturesque main railway line. So why not a call to electrify railways in the South West, and if APD was devolved might that not have a negative effect on West Country small businesses?

In some ways I'd like to see APD devolved to Wales - even though tinkering through taxation can be divisive - and then abolished completely in the country to see if it really does help CWL and the Welsh economy. That might give us a better idea of whether those who call for a general relaxation of the tax around the UK as a whole on economic grounds have a case.

My fear is that airlines would not reduce fares, or at least not by much, but simply pocket the APD equivalent instead of having to hand it over to government in order to increase their own profits.